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I'm a buyer at this point. We'll see how earnings turn out tomorrow, but no matter how bad the macro environment, I think $COIN at 7 P/E is a good buy long-term

I'm a buyer at this point. We'll see how earnings turn out tomorrow, but no matter how bad the macro environment, I think $COIN at 7 P/E is a good buy long-term.

hardwaresofton 4y ago
Same -- there are actually a bunch of tech stocks that are think are similarly a good bet right now, for example $NET (Cloudflare). Any other things that look like good buys under the market crush?
- misiti3780 4y ago
  AMZN?
- jmcgough 4y ago
  Intuit. Their P/E is high but they pay dividends, they're fairly recession-proof, and they have a big moat vs competition.
- silisili 4y ago
  As someone who works at a...semi competitor, I think you're absolutely right about Cloudflare. They've got a strong team, strong products, and a lot of users. I think they're in a great position to start making tons of cash if so inclined...
  - squeaky-clean 4y ago
    Whenever cloudflare has an outage and like half the internet stops working, it reminds me to buy some more.
    - RyanShook 4y ago
      Good point. But does Cloudflare have a moat? Seems like AWS or some other service could start competing directly with them if they wanted to.
      - astrange 4y ago
        They actually have opposite strategies - AWS and the other cloud providers charge a lot for outbound traffic to make it hard to leave them. I don't know if edge computing really has the advantage Cloudflare wants it to have though; it reminds me of open source projects with a lot of mirrors thinking you'll carefully pick the one in the city nearest you, as if anyone even notices.
        silisili 4y ago
        Having a ton of edges also give you the ability to do a lot more granular and faster DDoS/traffic load protection. You can, at its simplest form, just start dropping all incoming traffic to a destination at a node to save a site. With 10 or 20 POPs, that's a fairly big region. With thousands, it can get pretty targeted. Every company claims to be worldwide, but when their site is down, they tend not to care so much if you just start nuking traffic from random foreign areas to come back up. Not sure if Cloudflare does this today, but the potential is there.
      - deleted 4y ago
        [deleted]
- adventured 4y ago
  NET is massively overvalued here, given the selling and repricing context. It could drop by another 50% and still be very richly priced. It's trading for 28 times sales, which is absurd. I say that as a big fan of the company's long-term prospects. Wait a while yet, it can be had for below $45 at least.
  - azinman2 4y ago
    28x sales doesn’t seem so bad to me for a young highly innovative company with a huge fan base and real revenue streams that aren’t simply ads.
- adventured 4y ago
  Teladoc. Two times sales, a lot of negative sentiment on the stock (which I like to see so long as the business is sustaining). Bet on the long-term for the segment and their position. Their operating condition is sound and they have plenty of cash. Future returns were pulled forward during the pandemic era for things like remoting xyz (eg Zoom is suffering from that beating now as well). Let the bearishness rip these stocks up (a hard swing back from the insane bullishness previously, which is typical of speculators), take advantage of the stupidity that will abound in the selling down (exactly as it did on the way up). This is when you start looking at buying opportunities, to generate the returns later (even if it takes years). You take advantage of the big runs to sell to the fools chasing stocks like Teladoc at 6x-7x the present valuation. Buy sound companies with good growth horizons, bet longer-term in your calculating, buy cheaply enough to have a great moat / margin of safety. Rinse and repeat over time. It's all about taking advantage of the rampant irrationality, either direction. Just don't make the mistake of significantly overpaying and the odds are tilted that much more in your favor.
- localhost 4y ago
  INTC is trading at a PE of 7.1! And a dividend yield of 3.3%
mjhay 4y ago
Keep in mind that you might get burned - you are betting against many with better information.
- ______-_-______ 4y ago
  The efficient market hypothesis is a myth
  - vmception 4y ago
    exactly, the market mooned on the same information after Jerome Powell's speech than the ongoing decline the day after
    - esoterica 4y ago
      That doesn't contradict the EMH at all. The EMH does not say that stocks never go up or down without news.
      - vmception 4y ago
        It contradicts whichever part you want it to But that was the biggest rally in a very long time, 3% on broad indices, only to erase all gains and continue lower Somebody created exit liquidity
        esoterica 4y ago
        Again, doesn't contradict the EMH. Might want to reread a wikipedia article or two.
        vmception 4y ago
        Yeah thats because its an unfalsifiable hypothesis, which undermines its credibility right out the gate Any theory or hypothesis that has zero criteria for being proven wrong is not science and has no place being repeated at all So you’re not wrong about it not contradicting, because nothing does since its a bullshit saying masquarading as a hypothesis, there’s just no point in leaning on it
vmception 4y ago
> long-term what's your time horizon exactly? also there may be a steeper discount tomorrow, when the forward estimates in the conference call talk about how something related to the macroeconomic environment and declining volumes and empty NFT marketplace, but who knows its just that its not always about the earnings themselves
- lazyier 4y ago
  Long term these things can loose 100% of their value. That is an actual possibility.
jeffreyames 4y ago
Don’t try to catch a falling knife.
- TuringNYC 4y ago
  Catchy phrase, but what is actually wrong with dollar cost averaging through a downturn? It seems to be the only effective way to invest for the long term.
  - antoniuschan99 4y ago
    Yea would like to know any cons in this strategy. I’m dca’ing a portion of my paycheck every month. In Canada we have tfsa’s which allow for a certain contribution per year that is tax free if you get gains. For the last few months my monthly contribution gets swallowed up by the losses and the balance hasn’t moved lol
    - lotsofpulp 4y ago
      Why would you want buy something at a higher price than a lower price? I only care about high prices when I am selling.
    - riffraff 4y ago
      There's a difference if you DCA a broad index and a single thing. The broad index will, most likely, be positively skewed and still be around in 20 years. DCA makes a lot of sense. The single stock may just go bankrupt, or become smaller and never recover (think Kodak or Nokia). DCA does not make as much sense.
  - squeaky-clean 4y ago
    (Disclaimer that I own some NET so I don't necessarily believe this is the case for them but also am probably biased). You can't really know it's a downturn until it ends and pops back up. Otherwise it's just their downfall. If a stock is going to just drop and continue dropping until bankruptcy, or plateau forever at a low point, then cutting your losses early would be better. But no one can really be sure which way a stock is going to go in the long-term. If you believe the dip is just a temporary thing and end up being correct then yeah it's a good play. If you end up being wrong it's just a slow way to lose money.
gmays 4y ago
Same. I've also bought Affirm, Shopify, Netflix, Peloton and Roblox in addition to Coinbase since they've all dropped ~70-90% in the last 6 months. I agree they were overvalued, but we seem to be in overreaction territory now. Even if we haven't seen the bottom yet, I think we'll see a lot of upside in these over the next 2-5 years.
- colinmhayes 4y ago
  Netflix really seems like a loser to me. Every production company has a streaming service now, and most make better content than Netflix. Sure Netflix’s app might be better, but it’s also twice as expensive as every other service. I guess that Netflix’s “replace basic cable” package might work for people who only want one service, but from what I remember most people did not especially like basic cable. Wouldn’t be surprised if Netflix is gone in 20 years.
  - enos_feedler 4y ago
    Is netflix really aiming to “replace basic cable”? Seems more like replace hbo and a couple of random other channels. The price is outrageous, but I feel like we are getting to the point where market penetration involves business deals where a fraction of the sub is covered by someone else (carrier, credit card, etc).
    - colinmhayes 4y ago
      Look at the number of shows they produce compared to other services. On mobile so not going to link, but easy enough to find. Pretty clear to me that their strategy is to have a show for everyone’s favorite niche. Compare that to HBO where the strategy is to create shows that are actually good. 90% of Netflix is crap, and that’s not to say they don’t make good shows, they just make so many bad ones.
      - bredren 4y ago
        This is Apple TV+ strategy too. Though there have still been some expensive looking clunkers.
vmurthy 4y ago
It's not the P/E itself but ALL the future earnings discounted to the present using an appropriate discount rate that counts. See the uncertainties involved here? :) If you can predict a range for the future earnings and discount them and if it is underpriced , do buy :) .
- FredPret 4y ago
  Not only earnings but interest rates too, to work out the time value of money
trident5000 4y ago
You're basically gambling on monetary policy at the end of the day. If QT is steadfast, this market is at best going to be L shaped and volume will shrink for Coinbase. If QE remains, might see a reflation of the bubble.
anonu 4y ago
P/Es are irrelevant here I think. $COIN is a transaction-based business. Transactions are correlated with the price of BTCUSD. BTCUSD is down 50% in 6 months. The r/wsb crowd and others just wont be as enthused to trade something that isn't going to the moon. Thus, transactions will continue to trend down and $COIN will suffer.
- RyanShook 4y ago
  Yep, I purchased COIN at IPO as a proxy for BTC and other crypto. Don’t expect it to recover until cryptocurrencies do, may be a while…
- kolbe 4y ago
  However, the spread they make on their transactions gets wider as price action is more volatile.
  - sushid 4y ago
    Can you explain? A wider spread means less efficient markets which means fewer transactions which means lower revenue, no?
    - kolbe 4y ago
      Would you rather $1 per BTC on 1m BTC transacted or $10 per BTC on 500k transacted?
    - anonu 4y ago
      Spread is just what the market demands to get paid for taking the risk. Higher volatility can also mean way higher volume.
- dehrmann 4y ago
  Earnings next quarter will be interesting. Transactions are better correlated to the volatility of Bitcoin, so they should have quite a tailwind from it. Their problem will be if it scares people away from crypto. Q2 might be good, but the guidance will be bad.
outside1234 4y ago
Dude, once the Bitcoin bubble pops there are going to be zero revenues.
hristov 4y ago
That 7 P/E is not real. I took a quick look at yahoo finance and they showed a negative 740 Million tax provision in Q2 of last year and negative 135 Million in Q3 of last year. A negative tax provision means they actually showed profit from taxes. The US government is not in the habit of giving companies hundreds of millions of dollars (almost a billion) in negative taxes so this is likely something not reflective of real profits. I will not check what it is because I have no intention in investing in coinbase, but from experience from other companies these sharp profits coming from taxes are usually reversals of valuation allowances for tax loss carryforwards. They are non-cash items that do not have much to do with the current operation of the business. So if you really want to do P/E investing and are using real money, I highly recommend you learn some financial accounting and learn to remove these one time accounting charges/incomes that do not really have much to do with the company's operation. Furthermore, as it comes to coinbase, I should point out that their source of revenues is highly uncertain, and dependent on uncertain trading of exotic assets. When people talk about P/E there is an unspoken assumption of some business continuity. I am not sure this is present with coinbase, but you may believe differently.
- bb88 4y ago
  If I had $1M I would buy put options on COIN tomorrow. I think it's gonna be a blood bath on their stock on wednesday. Also this is the chart you've mentioned about the negative tax provision. https://finance.yahoo.com/quote/COIN/financials?p=COIN https://finance.yahoo.com/quote/COIN/financials?p=COIN Click on the quarterly link to see the -700M tax provision.

I'm a buyer at this point. We'll see how earnings turn out tomorrow, but no matter how bad the macro environment, I think $COIN at 7 P/E is a good buy long-term.

hardwaresofton 4y ago

Same -- there are actually a bunch of tech stocks that are think are similarly a good bet right now, for example $NET (Cloudflare). Any other things that look like good buys under the market crush?

misiti3780 4y ago
AMZN?
jmcgough 4y ago
Intuit. Their P/E is high but they pay dividends, they're fairly recession-proof, and they have a big moat vs competition.
silisili 4y ago
As someone who works at a...semi competitor, I think you're absolutely right about Cloudflare. They've got a strong team, strong products, and a lot of users. I think they're in a great position to start making tons of cash if so inclined...
- squeaky-clean 4y ago
  Whenever cloudflare has an outage and like half the internet stops working, it reminds me to buy some more.
  - RyanShook 4y ago
    Good point. But does Cloudflare have a moat? Seems like AWS or some other service could start competing directly with them if they wanted to.
    - astrange 4y ago
      They actually have opposite strategies - AWS and the other cloud providers charge a lot for outbound traffic to make it hard to leave them. I don't know if edge computing really has the advantage Cloudflare wants it to have though; it reminds me of open source projects with a lot of mirrors thinking you'll carefully pick the one in the city nearest you, as if anyone even notices.
      - silisili 4y ago
        Having a ton of edges also give you the ability to do a lot more granular and faster DDoS/traffic load protection. You can, at its simplest form, just start dropping all incoming traffic to a destination at a node to save a site. With 10 or 20 POPs, that's a fairly big region. With thousands, it can get pretty targeted. Every company claims to be worldwide, but when their site is down, they tend not to care so much if you just start nuking traffic from random foreign areas to come back up. Not sure if Cloudflare does this today, but the potential is there.
    - deleted 4y ago
      [deleted]
adventured 4y ago
NET is massively overvalued here, given the selling and repricing context. It could drop by another 50% and still be very richly priced. It's trading for 28 times sales, which is absurd. I say that as a big fan of the company's long-term prospects. Wait a while yet, it can be had for below $45 at least.
- azinman2 4y ago
  28x sales doesn’t seem so bad to me for a young highly innovative company with a huge fan base and real revenue streams that aren’t simply ads.
adventured 4y ago
Teladoc. Two times sales, a lot of negative sentiment on the stock (which I like to see so long as the business is sustaining). Bet on the long-term for the segment and their position. Their operating condition is sound and they have plenty of cash. Future returns were pulled forward during the pandemic era for things like remoting xyz (eg Zoom is suffering from that beating now as well). Let the bearishness rip these stocks up (a hard swing back from the insane bullishness previously, which is typical of speculators), take advantage of the stupidity that will abound in the selling down (exactly as it did on the way up). This is when you start looking at buying opportunities, to generate the returns later (even if it takes years). You take advantage of the big runs to sell to the fools chasing stocks like Teladoc at 6x-7x the present valuation. Buy sound companies with good growth horizons, bet longer-term in your calculating, buy cheaply enough to have a great moat / margin of safety. Rinse and repeat over time. It's all about taking advantage of the rampant irrationality, either direction. Just don't make the mistake of significantly overpaying and the odds are tilted that much more in your favor.
localhost 4y ago
INTC is trading at a PE of 7.1! And a dividend yield of 3.3%

mjhay 4y ago

Keep in mind that you might get burned - you are betting against many with better information.

______-_-______ 4y ago
The efficient market hypothesis is a myth
- vmception 4y ago
  exactly, the market mooned on the same information after Jerome Powell's speech than the ongoing decline the day after
  - esoterica 4y ago
    That doesn't contradict the EMH at all. The EMH does not say that stocks never go up or down without news.
    - vmception 4y ago
      It contradicts whichever part you want it to But that was the biggest rally in a very long time, 3% on broad indices, only to erase all gains and continue lower Somebody created exit liquidity
      - esoterica 4y ago
        Again, doesn't contradict the EMH. Might want to reread a wikipedia article or two.
        vmception 4y ago
        Yeah thats because its an unfalsifiable hypothesis, which undermines its credibility right out the gate Any theory or hypothesis that has zero criteria for being proven wrong is not science and has no place being repeated at all So you’re not wrong about it not contradicting, because nothing does since its a bullshit saying masquarading as a hypothesis, there’s just no point in leaning on it

vmception 4y ago

> long-term what's your time horizon exactly? also there may be a steeper discount tomorrow, when the forward estimates in the conference call talk about how something related to the macroeconomic environment and declining volumes and empty NFT marketplace, but who knows its just that its not always about the earnings themselves

lazyier 4y ago
Long term these things can loose 100% of their value. That is an actual possibility.

jeffreyames 4y ago

Don’t try to catch a falling knife.

TuringNYC 4y ago
Catchy phrase, but what is actually wrong with dollar cost averaging through a downturn? It seems to be the only effective way to invest for the long term.
- antoniuschan99 4y ago
  Yea would like to know any cons in this strategy. I’m dca’ing a portion of my paycheck every month. In Canada we have tfsa’s which allow for a certain contribution per year that is tax free if you get gains. For the last few months my monthly contribution gets swallowed up by the losses and the balance hasn’t moved lol
  - lotsofpulp 4y ago
    Why would you want buy something at a higher price than a lower price? I only care about high prices when I am selling.
  - riffraff 4y ago
    There's a difference if you DCA a broad index and a single thing. The broad index will, most likely, be positively skewed and still be around in 20 years. DCA makes a lot of sense. The single stock may just go bankrupt, or become smaller and never recover (think Kodak or Nokia). DCA does not make as much sense.
- squeaky-clean 4y ago
  (Disclaimer that I own some NET so I don't necessarily believe this is the case for them but also am probably biased). You can't really know it's a downturn until it ends and pops back up. Otherwise it's just their downfall. If a stock is going to just drop and continue dropping until bankruptcy, or plateau forever at a low point, then cutting your losses early would be better. But no one can really be sure which way a stock is going to go in the long-term. If you believe the dip is just a temporary thing and end up being correct then yeah it's a good play. If you end up being wrong it's just a slow way to lose money.

gmays 4y ago

Same. I've also bought Affirm, Shopify, Netflix, Peloton and Roblox in addition to Coinbase since they've all dropped ~70-90% in the last 6 months. I agree they were overvalued, but we seem to be in overreaction territory now. Even if we haven't seen the bottom yet, I think we'll see a lot of upside in these over the next 2-5 years.

colinmhayes 4y ago
Netflix really seems like a loser to me. Every production company has a streaming service now, and most make better content than Netflix. Sure Netflix’s app might be better, but it’s also twice as expensive as every other service. I guess that Netflix’s “replace basic cable” package might work for people who only want one service, but from what I remember most people did not especially like basic cable. Wouldn’t be surprised if Netflix is gone in 20 years.
- enos_feedler 4y ago
  Is netflix really aiming to “replace basic cable”? Seems more like replace hbo and a couple of random other channels. The price is outrageous, but I feel like we are getting to the point where market penetration involves business deals where a fraction of the sub is covered by someone else (carrier, credit card, etc).
  - colinmhayes 4y ago
    Look at the number of shows they produce compared to other services. On mobile so not going to link, but easy enough to find. Pretty clear to me that their strategy is to have a show for everyone’s favorite niche. Compare that to HBO where the strategy is to create shows that are actually good. 90% of Netflix is crap, and that’s not to say they don’t make good shows, they just make so many bad ones.
    - bredren 4y ago
      This is Apple TV+ strategy too. Though there have still been some expensive looking clunkers.

vmurthy 4y ago

It's not the P/E itself but ALL the future earnings discounted to the present using an appropriate discount rate that counts. See the uncertainties involved here? :) If you can predict a range for the future earnings and discount them and if it is underpriced , do buy :) .

FredPret 4y ago
Not only earnings but interest rates too, to work out the time value of money

trident5000 4y ago

You're basically gambling on monetary policy at the end of the day. If QT is steadfast, this market is at best going to be L shaped and volume will shrink for Coinbase. If QE remains, might see a reflation of the bubble.

anonu 4y ago

P/Es are irrelevant here I think. $COIN is a transaction-based business. Transactions are correlated with the price of BTCUSD. BTCUSD is down 50% in 6 months. The r/wsb crowd and others just wont be as enthused to trade something that isn't going to the moon. Thus, transactions will continue to trend down and $COIN will suffer.

RyanShook 4y ago
Yep, I purchased COIN at IPO as a proxy for BTC and other crypto. Don’t expect it to recover until cryptocurrencies do, may be a while…
kolbe 4y ago
However, the spread they make on their transactions gets wider as price action is more volatile.
- sushid 4y ago
  Can you explain? A wider spread means less efficient markets which means fewer transactions which means lower revenue, no?
  - kolbe 4y ago
    Would you rather $1 per BTC on 1m BTC transacted or $10 per BTC on 500k transacted?
  - anonu 4y ago
    Spread is just what the market demands to get paid for taking the risk. Higher volatility can also mean way higher volume.
dehrmann 4y ago
Earnings next quarter will be interesting. Transactions are better correlated to the volatility of Bitcoin, so they should have quite a tailwind from it. Their problem will be if it scares people away from crypto. Q2 might be good, but the guidance will be bad.

outside1234 4y ago

Dude, once the Bitcoin bubble pops there are going to be zero revenues.

hristov 4y ago

That 7 P/E is not real. I took a quick look at yahoo finance and they showed a negative 740 Million tax provision in Q2 of last year and negative 135 Million in Q3 of last year. A negative tax provision means they actually showed profit from taxes. The US government is not in the habit of giving companies hundreds of millions of dollars (almost a billion) in negative taxes so this is likely something not reflective of real profits. I will not check what it is because I have no intention in investing in coinbase, but from experience from other companies these sharp profits coming from taxes are usually reversals of valuation allowances for tax loss carryforwards. They are non-cash items that do not have much to do with the current operation of the business. So if you really want to do P/E investing and are using real money, I highly recommend you learn some financial accounting and learn to remove these one time accounting charges/incomes that do not really have much to do with the company's operation. Furthermore, as it comes to coinbase, I should point out that their source of revenues is highly uncertain, and dependent on uncertain trading of exotic assets. When people talk about P/E there is an unspoken assumption of some business continuity. I am not sure this is present with coinbase, but you may believe differently.

bb88 4y ago
If I had $1M I would buy put options on COIN tomorrow. I think it's gonna be a blood bath on their stock on wednesday. Also this is the chart you've mentioned about the negative tax provision. https://finance.yahoo.com/quote/COIN/financials?p=COIN https://finance.yahoo.com/quote/COIN/financials?p=COIN Click on the quarterly link to see the -700M tax provision.