WHY CATHIE WOOD LOADED THE BOAT WITH COINBASE STOCK! ‖ COIN, COIN Stock, COIN Stock Analysis

0:00 What started with bitcoin has since evolved into a thriving industry with dozens of different blockchains and thousands of different crypto assets representing almost every type of value coinbase is a company with an ambitious vision to create more economic freedom for every person in business we'll buy the dips uh and we are also at the same time very optimistic about how far coinbase has to go last wednesday coinbase stocks started trading on the

0:27 Nasdaq under the ticker symbol coin kathy wood from arkan vest wasted no time to make some moves as her firm actually purchased 602 000 shares of coinbase stock on the first day it was available to be purchased via direct listing and then on the second day the coinbase stock was available to the public kathy wood and arkan vest actually purchased another 340 000 shares of coinbase stock across three of their etfs on this episode of nine to five investing i'm

1:00 Going to explain why kathy wood made these high conviction moves and tell you my personal thoughts on coinbase stock as a long-term investment so why did kathy wood invest so much of her firm's capital in coinbase stock well obviously kathy wood and her team are bullish on coinbase stock over the long term again arkan vest does emphasize this five year time period but the real question is how much does her team at arc invest actually think coinbase stock will go up

1:31 Over the next five years what is arkhanvest's official price target for coinbase stock well this is a great question and the bloomberg correspondent really pushed kathy wood very hard on this question during an interview given on the first day that coinbase was trading on the nasdaq but kathy would refuse to give a clear answer do you have a price target for coinbase uh we we do um i i am reticent to to give it it is uh far above where it's going to open we

2:04 Think give us specifics on on a price target for coinbase give me a ballpark on the percent gains uh that you think you could see this is well well above our minimum hurdle rate of return okay all right i'll let that one go now does it have four digits or five digits the price target it it has a lot of room on the upside wood would not even give an answer to the very vague question about whether arkhamvest price target for coinbase stock was three digits or four digits and i loved

2:40 That shocked look that kathy wood gave when the bloomberg correspondent asked her for a second time about that price target for coinbase stock despite a lot of pressure from that bloomberg host kathy wood held strong and refused to give a target for coinbase stock she did say this though well we can't we're not allowed to say what we are are not going to do at any point in time you'll see our trades at the end of the day and so you'll know what we've done but

3:09 We we can't uh we can't tell you what we're going to do actions speak louder than words guys and as we know as i talked about at the beginning of this video kathy wood and arc invest loaded the boat on coinbase stock which shows a lot of conviction for a high price target so what are my thoughts on coinbase stock as a long-term investment well coinbase is the leading cryptocurrency exchange in the world they actually started in 2010 but have grown

3:39 Rapidly and now have over 56 million users on their platform starting so early and having millions of users on their platform already gives coinbase a really solid first mover advantage in the cryptocurrency space i mean you have bitcoin that was created in 2009 and then coinbase was actually founded in 2010 they were on it baby i mean the founders of coinbase they jumped on this opportunity before anybody knew what bitcoin was they jumped on this opportunity when

4:09 Bitcoin was trading at like eight cents per bitcoin crazy and obviously their instinct to get on this quick really paid off long term coinbase essentially started out as a simple place to buy and sell bitcoin but as the crypto economy grew so did coinbase in april 2021 coinbase actually has support for 90 different cryptocurrencies and they are actively growing that list and they also store about 11 of all cryptocurrency in the world so clearly coinbase is the leading

4:41 Exchange in an industry that is absolutely booming in 2021. just from a high level this looks like a very attractive investment to me personally so how does coinbase actually make coin how does coinbase make money currently the majority of coinbase's revenue is derived from their customers buying and selling bitcoin and ethereum the fees are based on the higher of the flat fee that is determined by dollar volume or the variable fee that is also based on dollar volume so bitcoin and ethereum prices directly increase

5:14 The fees that coinbase can justify charging their customers and therefore the price of coinbase stock is likely to correlate with the trend and prices of bitcoin and ethereum and here's something that kathy woods said that really caught my personal attention this is a new asset class so institutions are interested they are moving in and if if they add up to five percent in their asset allocation to uh to bitcoin and that alone could be up to 500 000 increase in the price wood says that

5:49 Cryptocurrencies are a new asset class that is generally becoming more mainstream and therefore institutional investors are slowly getting their beaks wet with this new asset class what also states that if institutional investors allocate just five percent of their diversified portfolios to bitcoin to this in turn would add about five hundred thousand dollars to the price of each bitcoin yes you heard me correctly kathy wood the one and only the extremely well respected investor from

6:21 Ark invest does believe that bitcoin will exceed the price of 500 000 eventually which is crazy is there anyone else out there that just keeps watching the price of bitcoin go up and up and is just for some reason not invested in it well that's basically me let me know in the comment section below if you've missed out on some of these amazing games from bitcoin or better yet if you have made money with bitcoin i'd love to know what price you actually

6:49 Got into it at and how long you've been holding it anyway this is exactly why bitcoin and therefore coinbase which should correlate with the price of cryptocurrencies particularly bitcoin and ethereum will grow like a weed or will likely grow like a weed over the next five years this cryptocurrency stuff is becoming more mainstream more and more people are using it and those institutional investors have a lot more money than retail now this is very important i am not saying

7:17 That coinbase stock and bitcoin are going to move in lock step i'm just saying the two should correlate just given the fact that coinbase is making those transaction fees based on dollar volume so next i want to talk about the single biggest risk to coinbase's business i believe that the single biggest risk to coinbase's business over the long term is going to be fee compression in 2021 coinbase is experiencing a rapid surge in customers trading crypto on their

7:44 Platform and therefore the company is banking coinbase is the main show in town right now but you better believe it as crypto becomes more and more mainstream they're gonna have more and more competitors and as market forces dictate more competitors means lower prices hence fee compression according to wood coinbase is earning about 70 basis points on the transaction value of their crypto trades on average and arkhamvest predicts this rate to fall to 50 basis points over the next

8:15 Five years i do not see fee compression over time ruining coinbase's business or anything like that it will obviously shrink margins but they're going to have so much volume that i believe their revenue will still be growing steadily over the next decade or so some of you that watch this channel a little more regularly you're familiar with me you know that i quit my job at a big four public accounting cpa firm as an auditor to make less than minimum wage making videos about the

8:44 Stock market on youtube and guess what my main client at the old cpa firm was actually a broker-dealer and i witnessed first-hand fee compression take place except instead of with crypto it was actually with commissions on stock trading it was actually an emerging competitor called robinhood that charged zero dollars for trades that forced all these other broker dealers to stop charging commissions for trades to their customers now the average broker dealer

9:12 Does have other ways to make money besides commissions on stock trades but i'm not gonna get into that on this video because that's not what really any of you guys are here for the point that i'm trying to make is that this robin hood this emerging competitor caused massive feed compression in the stock trading broker dealer type of industry and this made it to where a lot of the smaller players got bought out by the bigger players and this is exactly what i see happening

9:38 With the crypto industry but on a smaller scale i don't think they're going to go to zero commissions anytime soon for the record but you will see reduction in in the cost to trade crypto in general as time goes on as more competitors emerge and keep undercutting their their other competitors with lower prices my prediction is that coinbase will get through that fine because it's pretty likely they'll end up buying out a lot of those smaller players that

10:04 Inevitably enter the industry and kind of disrupt their business a bit now that i've given you my main concern about coinbase's business long term you know the fee compression and how i believe coinbase will be able to handle it buyouts of smaller players uh i want to talk about my bull thesis for coinbase stock my main reason to be bullish on coinbase stock long term is going to be their outsized growth and revenue net income and users on their platform

10:33 Coinbase had 1.3 billion dollars of revenue in 2020 which actually gives them a revenue growth rate of 139 from 2019 to 2020. and this is where the growth numbers get absolutely insane coinbase actually brought more revenue in the first quarter of 2021 than they did in their entire fiscal years of 2019 and 2020. just let that sink in for a second i mean if you're a stock market nerd like me you know that growth like that is basically unheard of i mean revenue growth like that is absolute insanity but it actually makes a lot of sense not only do we have an explosion in the price of bitcoin and ethereum prices that fuel the transaction fees associated with these mainstream cryptocurrencies but we also have an explosion of people interested in cryptocurrencies

11:25 Because you know a lot of people like to chase and here is just another bullish piece of information coinbase is actually already profitable and if you follow technology companies especially like the spax i've covered on this channel you know that most of those companies aren't even profitable yet but not coinbase coinbase is a technology company that is already profitable coinbase made 322 million dollars in 2020 and they've already booked profits in the first quarter of

11:53 2021 to the tune of 765 million it is worth mentioning however that they lost money in 2019 and 2018. in 2017 when the crypto market went on a lower scale parabolic bull run near the end of the year they made 380 million dollars almost entirely in that december so clearly rising prices in bitcoin and ethereum and then more people being interested because of those rising prices and therefore making crypto type of trades on coinbase are what allow coinbase to do enough volume to actually be profitable if bitcoin and ethereum happen to be crashing then there aren't gonna be as many

12:33 Trades i mean after after people panic sell of course but you know once the dust settles there won't be as much trades on these cryptos and therefore coinbase won't be able to make as much money or they might actually even lose money in that case so the fact that cryptocurrencies go through these really traumatic boom and buzz type of cycles are another risk to be aware of for coinbase's business in addition to that fee compression that we talked about

12:58 Earlier nobody can predict the future but my ideal scenario would be to see a crypto market crash similar what we saw in january of 2018 because this would likely give me a chance to load up on coinbase at a great price point from 2020 to 2021 coinbase grew their overall users from 35 million to 56 million in addition to that they increased their monthly active users by more than 100 so yeah it is clear to me that coinbase does have a business that

13:28 Is absolutely booming right now but you also have to understand it's equally as important to understand that crypto definitely does have this bus factor as well anyways nine to five game thank you so much for watching the video all the way through as it really helps the channel please consider subscribing if you enjoyed the video and i'll see you in the next one cheers if you want to watch a video about my best stocks to buy in april 2021 then click the thumbnail on the

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