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Coinbase ((COIN - Free Report) ) is the leading crypto exchange in the United States. The San Francisco-based company is facing a securities violation lawsuit from the Securities and Exchange Commission. However, since the SEC lawsuit was filed one month ago, shares have soared by more than 60%!
Image Source: Zacks Investment Research
SEC Lawsuit Fallout & Price Action Versus News:When in doubt, the best course of action for investors is to trust the price and volume action in a stock. Why? Price and volume represent real money being risked, while headlines in a vacuum can, at times, represent fear, uncertainty, and doubt. When a stock shrugs off bad news like COIN, it sends investors a clear message of strength. Tuesday, Coinbase shares emerged from a long base structure on massive volume well above the norm – a sign of demand.
Image Source: Zacks Investment Research
Regulatory Clarity
Believe it or not, the lawsuit may end up being a net positive for the company. While the case is an obstacle, it is short-term in nature. In the long term, COIN will benefit from regulatory clarity. Something CEO Brian Armstrong has pleaded with the SEC for years for.
Strong Balance Sheet
Seth Klarman is a legendary value investor, billionaire, and one of the highest-earning money managers in the world. In a recent interview, Klarman stated that he avoids crypto but sees value in Coinbase, saying, “Coinbase is sitting on $5 billion in cash, has less than that in debt, and is doing some smart things.”
Image Source: Zacks Investment Research
Bitcoin ETF Catalyst
“Slowly at first, then all at once” seems to sum up the rush for big institutions to get a piece of the crypto space. Eight institutions have filed papers for a Bitcoin ETF in the past few months, including Fidelity and the world’s largest asset manager, BlackRock ((BLK - Free Report) ). Because Coinbase is listed as the custodian for these ETFs, the company benefits directly should any of the ETFs be approved.
High Short Interest
A quarter of Coinbase’s float remains short. In other words, if there are any positive surprises, the high short interest should act like fuel thrown onto a fire.
Positive ESP Score
Coinbase’s positive Earnings ESP score means that the company will likely to beat earnings expectations when it reports in August.
Image Source: Zacks Investment Research
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The Coinbase Bull Case
Coinbase ((COIN - Free Report) ) is the leading crypto exchange in the United States. The San Francisco-based company is facing a securities violation lawsuit from the Securities and Exchange Commission. However, since the SEC lawsuit was filed one month ago, shares have soared by more than 60%!
Image Source: Zacks Investment Research
SEC Lawsuit Fallout & Price Action Versus News:When in doubt, the best course of action for investors is to trust the price and volume action in a stock. Why? Price and volume represent real money being risked, while headlines in a vacuum can, at times, represent fear, uncertainty, and doubt. When a stock shrugs off bad news like COIN, it sends investors a clear message of strength. Tuesday, Coinbase shares emerged from a long base structure on massive volume well above the norm – a sign of demand.
Image Source: Zacks Investment Research
Regulatory Clarity
Believe it or not, the lawsuit may end up being a net positive for the company. While the case is an obstacle, it is short-term in nature. In the long term, COIN will benefit from regulatory clarity. Something CEO Brian Armstrong has pleaded with the SEC for years for.
Strong Balance Sheet
Seth Klarman is a legendary value investor, billionaire, and one of the highest-earning money managers in the world. In a recent interview, Klarman stated that he avoids crypto but sees value in Coinbase, saying, “Coinbase is sitting on $5 billion in cash, has less than that in debt, and is doing some smart things.”
Image Source: Zacks Investment Research
Bitcoin ETF Catalyst
“Slowly at first, then all at once” seems to sum up the rush for big institutions to get a piece of the crypto space. Eight institutions have filed papers for a Bitcoin ETF in the past few months, including Fidelity and the world’s largest asset manager, BlackRock ((BLK - Free Report) ). Because Coinbase is listed as the custodian for these ETFs, the company benefits directly should any of the ETFs be approved.
High Short Interest
A quarter of Coinbase’s float remains short. In other words, if there are any positive surprises, the high short interest should act like fuel thrown onto a fire.
Positive ESP Score
Coinbase’s positive Earnings ESP score means that the company will likely to beat earnings expectations when it reports in August.
Image Source: Zacks Investment Research