News
Best Crypto Stocks: Coinbase Global vs. MicroStrategy
Bitcoin‘S (Bitcoin -1.70%) the price has more than doubled in the past 12 months as the approval of its first spot-priced ETFs, halving of mining premiums and stabilization of interest rates brought the bulls back. The easiest way to profit from Bitcoin’s recovery was to simply buy the cryptocurrency or invest in one of the new ETFs.
However, The Bitcoin rally he also lit a fire under similar actions CoinBase (CURRENCY -1.47%), one of the leading cryptocurrency exchanges in the world and MicroStrategy (MSTR -1.93%), an older enterprise software company that began accumulating Bitcoin in 2020. Over the past 12 months, Coinbase stock is up more than 280% and MicroStrategy stock is up more than 270%. Let’s see which of these cryptocurrency stocks is a better buy right now.
Image source: Getty Images.
Coinbase’s business is finally stabilizing
Coinbase generates the majority of its revenue from transaction fees, so its growth is closely tied to the broader cryptocurrency market. In 2023, it generated 34% of its trading volume from Bitcoin, 20% from Ether (ET -0.81%) and 11% from his stablecoins. The remaining 35% came from smaller altcoins and other crypto assets.
Coinbase Revenue Soared 514% in 2021 Thanks to Stimulus Checks, Social Media Buzz, and Fear of Missing Out (FOMO) has pushed more investors into the cryptocurrency market. However, its revenue fell 59% in 2022 as rising rates burst the asset bubble.
Its revenue fell another 3% in 2023 as the “crypto winter” cooled its business. But in the fourth quarter of 2023 and the first quarter of 2024, the trading volume and total revenue increased sequentially again. This stabilization has largely been driven by the aforementioned tailwinds for Bitcoin and other cryptocurrencies.
Coinbase has also continued to grow as many of its largest competitors have been derailed by regulatory challenges, and it has become the primary custodian of most of the market’s new Bitcoin spot price ETFs. Analysts expect its revenue to rise 80% for the full year.
Coinbase’s adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) Margin also turned positive in 2023 as it aggressively reduced costs. Analysts expect its adjusted EBITDA margin to rise from 31% in 2023 to 49% in 2024 as the crypto winter ends. Based on those expectations, Coinbase stock still appears reasonably valued at 19 times this year’s adjusted EBITDA.
MicroStrategy continues to bet everything on BitcoinNo
MicroStrategy’s core software business primarily sells data analytics software for large enterprise customers. Over the past decade, it has faced stiff competition from cloud-based analytics companies such as Salesforcediversified cloud infrastructure platforms such as Amazon Web Services (AWS) e Microsoft Azure and smaller business intelligence companies.
MicroStrategy has gradually expanded its subscription-based services to offset declining licenses and support revenues. But that process has been slow, and the company unexpectedly shifted gears in August 2020 by purchasing $250 million in Bitcoin. As of the end of the first quarter of 2024, it had spent $7.54 billion to purchase 214,400 Bitcoin at an average cost of $35,180 per Bitcoin.
As of this writing, MicroStrategy’s Bitcoin holdings are now worth $13.8 billion, or more than half of its $25.3 billion enterprise value.
Bulls believe MicroStrategy’s Bitcoin accumulation strategy will transform it into a much larger company, even if growth in its core business stalls. But analysts still expect the company’s revenue to fall about 1% this year as it struggles to sell more software.
The company is also taking on more debt to finance its Bitcoin purchases, and analysts expect it to become unprofitable again under generally accepted accounting principles (GAAP) this year as it accrues higher depreciation costs from its Bitcoin purchases. Analysts expect its adjusted EBITDA to grow 8% this year, but its shares look expensive at 277 times that estimate.
The obvious winner: Coinbase
Coinbase will remain a hub and indicator of the growing cryptocurrency market, while MicroStrategy is simply a slow-growing software company betting on Bitcoin. Coinbase is also growing faster and trading at lower valuations than MicroStrategy. Both stocks could continue to rise as the cryptocurrency market recovers, but Coinbase is clearly a more promising long-term investment than MicroStrategy right now.
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Leo Sun has positions at Amazon. The Motley Fool has positions and recommends Amazon, Bitcoin, Coinbase Global, Ethereum, Microsoft and Salesforce. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.