How to Buy Coinbase (COIN) Stock

Coinbase (NASDAQ: COIN), a prominent cryptocurrency exchange platform, has been a significant player in the digital asset space since its IPO on April 14, 2021. As a publicly traded company, Coinbase provides users with a platform to buy, sell, and trade a variety of cryptocurrencies. Given its established presence and role in the evolving crypto market, Coinbase remains a compelling option for investors looking to diversify their portfolios with exposure to the digital currency sector. To make informed investment decisions, it’s essential to review the latest financial performance and market trends related to Coinbase. Our updated guide to Coinbase stock offers detailed insights to help you navigate the investment landscape and understand the company’s current position in the crypto market.

How to Buy Coinbase (COIN) Stock

Coinbase trades on the NASDAQ, offering easy access for retail investors who want to diversify their portfolios or test a new and exciting stock. 

If you’re familiar with how to buy stocks, you can use your current brokerage account to invest in Coinbase stock. If not, use these steps to get started. 

Step 1: Pick a Brokerage

A broker is a financial service company that offers retail investors a trading platform that they can use to buy and sell shares of stock online. Before you can buy or sell stock, you must choose a broker and open your brokerage account. 

Some of the factors you might want to consider when you choose the best broker for your needs may include:

Commissions and Fees

Though many brokers now offer commission-free trading, you shouldn’t assume that your broker will allow you to buy and sell stocks with no fees. Be sure to know and understand your broker’s fees before you open an account.

Trading Platform

Some brokers offer simple and streamlined trading platforms aimed at investors who have never bought or sold shares of stock before. Other brokers focus on offering a wide range of educational resources and analysis tools that you can use to enhance your investing experience. You may want to watch a few video demonstrations before selecting a broker to be sure that you’re opening an account with a platform you’ll be able to use effectively.

Access to Additional Markets

If you’re only interested in buying Coinbase stock once it is publicly listed, you can invest effectively using any brokerage platform that offers NASDAQ access. However, if you want to invest in additional securities like options contracts, cryptocurrencies, futures contracts and precious metals, choose a broker that offers a single platform for all of your interests.

Step 2: Decide How Many Shares You Want

After you’ve opened your brokerage account, keep track of how the share price of Coinbase moves. You can track and view COIN here or check the IPO calendar here if you bought into Coinbase early and wish to try other IPOs.

Decide how many shares you want to purchase based on the total amount of money that you can afford to invest. As is the case with any stock, never invest more money than you can afford to lose, as stock prices can dip suddenly and without warning.

Step 3: Choose Your Order Type

After deciding how many shares of stock you want to buy, one of the final steps you should take is deciding which type of order you wish to place. The order type dictates how much money you’ll pay for each share of Coinbase stock you buy, when your order is executed and more. 

Some of the most common types of stock orders you’ll see may include:

Market Orders

A market order tells your broker that you’d like to execute your stock order at the current market rate. For example, if shares of Coinbase stock currently trade at $200 a share and you place an order to buy 10 shares of stock at the current market rate, you’ll likely pay around $200 per share of stock you buy.

Limit Orders

A limit order tells your broker that you want to buy a select number of shares of stock at or below a specified price. When you place a limit order, you’ll specify a maximum price that you want to pay for each share of stock you buy, in addition to the number of shares you want to purchase. For example, you might place a limit order with a limit price of $200 per share of Coinbase stock. If your broker executes your order at or below a price of $200 per share, your broker will carry out the order. If the price of Coinbase stock doesn’t fall to $200 or lower throughout the trading day, your broker will not fill the order.

Step 4: Execute Your Trade

After you have chosen an order type and decided how many shares of stock you want to buy, double-check your order details before submitting the order. After you submit your order, your broker will take care of executing the order according to your specific instructions. 

If your broker cannot fill your order (for example, because the limit price isn’t reached during the trading day), it may leave it open indefinitely or cancel the order at the end of the day according to your preferences.

Coinbase Financial History

Coinbase went public in April 2021 through a direct listing, initially seeing its share price soar to approximately $429 on its debut. However, it faced significant challenges amid regulatory scrutiny and macroeconomic factors that affected the broader cryptocurrency market. By 2022, the stock plummeted, hitting a low of below $50, driven by declining crypto prices and increased regulatory pressure on digital assets.

In 2023, the landscape began to shift positively with rising investor interest in Bitcoin ETFs, which bolstered market sentiment and helped create a more favorable environment for cryptocurrencies. This turn of events coincided with a solid recovery in Coinbase's share price, which climbed to about $186 by the end of the year. Throughout this period, Coinbase's financial performance remained under scrutiny, but the renewed optimism in cryptocurrencies, coupled with strategic adjustments, positioned the company for growth amidst evolving market dynamics.

Coinbase’s Growth Potential

Coinbase's growth potential is exemplified by its remarkable revenue growth trajectory, which surged from $534 million in FY2019 to an impressive $7.8 billion in FY2021, reflecting a stunning compound annual growth rate of 283%. This substantial increase demonstrates Coinbase's ability to capture a significant share of the cryptocurrency market, especially during periods of heightened trading volumes.

The company's performance closely correlates with cryptocurrency market valuations, evidenced by recent trading volumes that have surpassed those of 2023, indicating a resurgence in user activity and engagement. As cryptocurrency trading gains traction, Coinbase stands to benefit from increased transaction fees and user participation.

Additionally, Coinbase showcases strong financial metrics, highlighted by positive operating income and robust free cash flow figures. These indicators not only reflect the company's operational efficiency but also its capacity to scale sustainably. Overall, with a solid revenue growth trajectory, strategic positioning in the evolving cryptocurrency market, and strong financial performance, Coinbase presents significant growth potential for the future.

Why Should You Buy Coinbase Stock?

Investing in Coinbase stock offers a chance to enter the growing cryptocurrency market. Coinbase, a major cryptocurrency exchange in the U.S., allows users to buy, sell, and store digital assets. As cryptocurrencies gain broader acceptance, Coinbase could benefit from this trend. The company also earns revenue through services like staking and transaction fees. This makes Coinbase a stable option in the fluctuating crypto market. These factors make Coinbase stock worth considering for your investment portfolio.

Growing Crypto Adoption

The adoption of cryptocurrencies is increasing globally. More individuals, institutions, and governments are using digital currencies. Coinbase is a major cryptocurrency exchange that can benefit from these trends. It operates in over 100 countries. The platform is user-friendly and supports a variety of cryptocurrencies. As more people invest in crypto, trading volumes on Coinbase rise. This increase drives revenue through transaction fees. There is also potential for mainstream adoption of crypto for payments, remittances, and decentralized finance (DeFi). Coinbase is positioned to capture a significant market share as these trends continue.

Diversification of Services

Coinbase is expanding its services beyond crypto trading. This strategy helps lessen its reliance on transaction fees. The company now offers staking, lending, non-fungible tokens, and custodial services for institutional investors. Its Coinbase Prime platform is aimed at large institutions, hedge funds, and corporate clients. This platform provides various services, including custody, staking, and analytics. By creating multiple revenue streams, Coinbase can better handle the volatility of the crypto market. This approach supports the company's long-term growth. Additionally, it positions Coinbase as a broader blockchain technology company. This could lead to new opportunities in the Web3 space.

First-Mover Advantage and Regulatory Position

Coinbase was the first major cryptocurrency exchange to go public. This provided the company with a first-mover advantage. Its public listing has brought added credibility and visibility. Many of its competitors do not have the same level of recognition. Coinbase also works closely with regulators. This is important as governments worldwide are creating regulatory frameworks for cryptocurrency. This gives Coinbase an advantage over competitors who may struggle with compliance. Their proactive approach to regulation makes it a safer option for investors. Investors can gain exposure to the crypto market while minimizing risks related to regulatory uncertainty.

Considerations Before Buying Coinbase Stock

Before investing in Coinbase stock, consider a few important factors. Coinbase is a major cryptocurrency exchange that attracts many investors and traders. However, the cryptocurrency market is very volatile. Regulatory changes and company performance can greatly affect the stock price. It's important to understand the business model and the competitive landscape. Look for potential growth opportunities as well. Also, keep an eye on external factors like market trends, tech advancements, and economic conditions. These elements can help you assess the risks and rewards of buying Coinbase shares. This guide will help you navigate the key points to consider before investing in this fast-changing sector.

Volatility of the Cryptocurrency Market

Cryptocurrencies are highly speculative assets. Their prices can change dramatically over short periods. Coinbase's business relies on crypto trading volumes. These volumes often rise during bull markets when prices increase. They tend to drop during bear markets when prices fall. When major cryptocurrencies like Bitcoin or Ethereum lose value, investor interest often declines. This leads to lower trading volumes and reduced transaction fees for Coinbase. As a result, Coinbase's stock is vulnerable to the same volatility as the broader crypto market. Investors should be aware of the potential for sharp price movements. This applies to both the crypto market and Coinbase's stock. These movements may not always reflect the company's fundamentals but rather the sentiment surrounding crypto assets.

Regulatory Uncertainty

The cryptocurrency space is mostly unregulated. However, governments and regulators around the world are working to establish clearer rules. Coinbase has tried to operate within this legal framework. As a result, it has become one of the most regulated crypto exchanges, especially within the U.S. Future regulations could significantly impact the company. New rules might limit which cryptocurrencies can be traded. They could also raise compliance costs or restrict services such as staking and lending, which Coinbase is trying to expand. Furthermore, the U.S. Securities and Exchange Commission (SEC) and other regulators might classify some cryptocurrencies as securities. This could lead to more oversight and stricter regulations. Such changes may limit Coinbase’s offerings and growth potential. Investors should keep an eye on the evolving regulatory landscape and how it might affect the company's business model.

Revenue Dependence on Transaction Fees

A large portion of Coinbase's revenue comes from transaction fees. Users are charged fees when they buy, sell, or trade cryptocurrencies. While this model has been profitable, it also leaves the company vulnerable to competition and market changes. More competitors, including decentralized exchanges (DEXs), are entering the market. These DEXs allow users to trade crypto assets without a centralized intermediary, often at lower fees. A decline in crypto trading activity could also hurt Coinbase’s revenue. This decline can result from regulatory changes, market conditions, or shifts in investor interest. Although Coinbase is working to diversify its revenue with new services like staking, NFTs, and institutional offerings, its core business still depends on transaction fees. Therefore, it is essential for investors to evaluate the sustainability of this revenue model in a rapidly changing industry.

Should You Buy Coinbase Stock?

Investing in Coinbase stock has both rewards and risks due to the growing crypto market. Coinbase is a top exchange with promising growth.

Coinbase earns money from transaction fees and subscription services, but investors should be careful due to market fluctuations affecting demand and profitability. It provides a promising chance for those interested in cryptocurrencies, but risks must be considered like market changes and uncertain profits.

Frequently Asked Questions