• Coinbase shares posted massive gains in October on the back of a solid cryptocurrency market.
  • The company is diversifying into the NFTs niche.
  • Much focus is on Bitcoin as it continues to hit new highs

Coinbase Global Inc. (NASDAQ: COIN) is one of the earliest cryptocurrency companies and went public in April 2021. Initially, the market doubted the company’s shares, leading to a massive dip just a month after the IPO.

But there is a turnaround, and market sentiment seems to be in COIN’s favor. At writing (0608 UTC), the Coinbase stock was up 2.40% after-hours trading and 7.81% up year to date to $353.92. 

In October alone, Coinbase Global’s shares rose 40.4%. The surge came on the back of a solid performance in the cryptocurrency market, where Bitcoin gained 48.7%, and Ethereum rose 51.4%.

A chart showing price action for Coinbase shares year to date, with a massive surge in October, extending into November.

But Bitcoin did not stop surging in October because the cryptocurrency was trading at $67,891 at writing. Even this is lower than the historical peak established in the early morning hours of Tuesday 9 November 2021, at $68,530 as of 0359 UTC.

Coinbase is one of the largest Bitcoin brokers, and the increased attractiveness of BTC means more customers for the company. This means Coinbase Global is standing on a firm foundation, and the stock could gap up if the earnings figures come in positive.

Coinbase is exploring NFTs for diversification

The cryptocurrency space has many iterations, including non-fungible tokens (NFTs) and decentralized finance DeFi). In the recent past, all of these iterations have gained traction in the market, where both NFTs and DeFi achieved record performances.

NFTs are revolutionizing the world of art and, in the process, making some individuals extremely rich. In Q3 2021, for example, the NFT trading volume slightly surpassed $10 billion.

While NFTs are shaking up the art world, they also provide an avenue for companies like Coinbase to diversify their businesses. Coinbase said in a statement on October 12 that it was launching Coinbase NFT that “will make minting, purchasing, showcasing, and discovering NFTs easier than ever.”

At writing, the company had a waiting list of over 2.5 million emails. This means the new product could potentially add a massive chunk to Coinbase’s revenue. Moreover, some of the businesses already operating in the niche, such as Rival OpenSea, are reporting hundreds of millions in transaction volume – OpenSea’s transaction volume in August was $236.5 million.

More new products solidifying Coinbase’s fundamentals

Other than NFTs, Coinbase is also foraying into crypto derivatives. In September, the company notified authorities in an application that it wishes to trade crypto derivatives. 

The application comes at an opportune time when the monthly volumes for crypto derivatives surpass the spot. In June, the total spot volumes came in at $2.7 trillion, compared to $3.2 trillion for derivatives volume, according to data (pdf) from CryptoCompare.

With more investors seeing crypto as mainstream investable assets, the chances are high that Coinbase will decouple its revenue model from Bitcoin.

The impact of crypto going mainstream will also amplify Coinbase’s revenues seeing that the company just enhanced the availability of Coinbase Wallet. In addition, the company unveiled a downloadable version of Coinbase Wallet that helps “to increase access to the larger crypto ecosystem.”

Because of such solid fundamentals, Wall Street expects Coinbase to post strong figures in the upcoming earnings report. Analysts anticipate revenues to come in at $1.57 billion, and the Whisper number should be a $2.40 per share gain.

Bottom line

Coinbase turned profitable last year and, since then, its earnings have come in record numbers. Such a healthy business is what investors need to flock to the stock. In a sense, the upcoming earnings will stimulate further surges in the COIN shares if they meet analysts’ expectations.