$COIN may crash after earnings

Coinbase seems like it would be a good play. Earnings last quarter were huge, coin trading is hyped right now, coins are at all time highs, $COIN advertised P/E ratio is very low, etc are all contributing factors to the bull run that $COIN is currently experiencing. Coinbase earnings are releasing the 12th, and it is my opinion that COINBASE earnings will be far lower than expected leading to a large dump. Reason 1: Coin prices don't make Coinbase money, but volume does. To put things into perspective, I calculated Coinbase's quarterly trading volume in USD. The numbers speak for themselves. (Source: https://nomics.com/exchanges/gdax-coinbase-exchange): Q1: $337,726,593,729 Q2: $456,237,466,410 Q3: $324,071,319,552 Reason 2: Q2 Earnings were great! Or were they? Coinbase's Q1 income before taxes was $996,666,000. After taxes was $771,463,000 (-$225,203,000) Coinbase's Q2 income before taxes was $868,881,000. After taxes was $1,606,349,000 (+$737,468,000) Using the ratio of Q1 volume/Q1 income = Q3 volume/Q3 income, Q3 income before tax will likely be around 736,403,266 after tax (956,367,877 before). Using the ratio of Q2 volume/Q2 income = Q3 volume/Q3 income, Q3 income before tax will likely be around 475,226,528 after tax (617,177,309 before). How did this happen? Coinbase received a one time tax credit relating to their IPO. Notice the 12% drop in income even though volume was up 35%. Following this trend, Coinbase will need a substantial increase in trade volume to see any growth. Reason 3: Dilution Q1's earning report shows that there were 126,996,000 diluted shares (79,373,000 basic) used to calculate their EPS. Q2's earning report shows that there were 248,147,000 diluted shares (204,728,000 basic) used to calculate EPS. If this trend continues into Q3, the earnings per share data could be disastrous. Reason 4: Insider selling On November 2nd, the director at Coinbase sold 77,562 shares of $COIN at prices ranging from $326.28-$344.33. The total sold amount was $25,855,002. Insider selling 10 days prior to an earnings report is probably not a good sign. As u/MilesPower/ pointed out, this was automatic so it may be completely normal.

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$COIN may crash after earnings

bearish

Coinbase seems like it would be a good play. Earnings last quarter were huge, coin trading is hyped right now, coins are at all time highs, $COIN advertised P/E ratio is very low, etc are all contributing factors to the bull run that $COIN is currently experiencing. Coinbase earnings are releasing the 12th, and it is my opinion that COINBASE earnings will be far lower than expected leading to a large dump.

Reason 1: Coin prices don't make Coinbase money, but volume does.

To put things into perspective, I calculated Coinbase's quarterly trading volume in USD. The numbers speak for themselves. (Source: https://nomics.com/exchanges/gdax-coinbase-exchange):

Q1: $337,726,593,729

Q2: $456,237,466,410

Q3: $324,071,319,552

Reason 2: Q2 Earnings were great! Or were they?

Coinbase's Q1 income before taxes was $996,666,000. After taxes was $771,463,000 (-$225,203,000)

Coinbase's Q2 income before taxes was $868,881,000. After taxes was $1,606,349,000 (+$737,468,000)

Using the ratio of Q1 volume/Q1 income = Q3 volume/Q3 income, Q3 income before tax will likely be around 736,403,266 after tax (956,367,877 before).

Using the ratio of Q2 volume/Q2 income = Q3 volume/Q3 income, Q3 income before tax will likely be around 475,226,528 after tax (617,177,309 before).

How did this happen? Coinbase received a one time tax credit relating to their IPO. Notice the 12% drop in income even though volume was up 35%. Following this trend, Coinbase will need a substantial increase in trade volume to see any growth.

Reason 3: Dilution

Q1's earning report shows that there were 126,996,000 diluted shares (79,373,000 basic) used to calculate their EPS. Q2's earning report shows that there were 248,147,000 diluted shares (204,728,000 basic) used to calculate EPS. If this trend continues into Q3, the earnings per share data could be disastrous.

Reason 4: Insider selling

On November 2nd, the director at Coinbase sold 77,562 shares of $COIN at prices ranging from $326.28-$344.33. The total sold amount was $25,855,002. Insider selling 10 days prior to an earnings report is probably not a good sign. As u/MilesPower/ pointed out, this was automatic so it may be completely normal.

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286.49

Target Price

7/ 10

Confidence

< 1 Week

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