Coinbase Trading Above 200-Day SMA: Is it Time to Add the Stock?

Coinbase Global COIN is trading above its 200-day simple moving average (SMA), signaling a bullish trend. The 50-day and 200-day SMAs are key indicators for traders and analysts to identify support and resistance levels. These are considered particularly important as they are the first markers of an uptrend or downtrend.COIN, the crypto leader, is poised to benefit from listing a broader range of crypto assets and tokenized equities, international expansion, strategic buyouts and increased volatility. It is continually undertaking strategic growth initiatives, fortifying its on-chain consumer strategy by building on DeFi-powered consumer applications, launching a unique equity index future and joining traditional finance with crypto, among others.  CEO Brian Armstrong envisions Coinbase to be the “everything exchange.”  COIN's 200-Day SMAImage Source: Zacks Investment ResearchCOIN: An OutperformerShares of Coinbase have rallied 98.7% year to date compared with the industry’s increase of 18.1%, the sector’s rise of 17.6% and the Zacks S&P 500 composite’s gain of 18.1%. Image Source: Zacks Investment ResearchShares of Robinhood Markets HOOD and Interactive Brokers Group, Inc. IBKR, both crypto-oriented companies, have gained 211.7% and 45.2% year to date , respectively.Robinhood has evolved from a brokerage firm mainly trading in digital assets to a more mature and diversified entity, striving to widen its market and reach. Robinhood continues to diversify its product base to acquire new clients and gain market share. Interactive Brokers is known for its advanced electronic trading platforms and global market access. The company leverages proprietary systems to automate nearly every aspect of the brokerage process — from trade execution and risk management to compliance and customer onboarding —enabling it to operate with minimal human intervention and significantly lower costs than traditional brokers.Should you consider adding COIN to your portfolio only based on positive price movements? Let’s delve deeper and find out the factors that can help investors decide whether it is a good time to add COIN stock to their portfolios.Factors Acting as a Tailwind for COIN StockCoinbase, America’s largest registered crypto exchange, stands to gain from increased volatility and rising prices in the crypto asset market.  The accelerating adoption of stablecoins is poised to further boost revenues. Coinbase posted positive EBITDA for eight consecutive quarters, supported by the durability of its subscription-based model. Coinbase stands to gain from strengthened banking relationships, new licenses and the introduction of customized products for diverse customer segments. With a clear growth strategy, the company is increasing its market share in both the U.S. spot and derivatives markets, broadening its product suite and expanding its presence globally. While the Derbit acquisition establishes Coinbase as a global force in futures, options and perpetuals, deals like Liquifi and One River Digital broaden COIN's tokenization and institutional services.COIN added DEX trading to its app for U.S. users, except New York State. This expands access from 300 tokens to potentially millions of assets instantly. The DEX integration supports COIN’s goal of a unified and centralized DeFi platform.Recently, the founders of Sensible joined Coinbase to boost its on-chain consumer roadmap. The crypto leader believes the future of finance is on-chain and the team will fortify its on-chain consumer strategy by building on DeFi-powered consumer applications.A strong liquidity position enables continued strategic investments aimed at enhancing offerings and driving sustainable growth. Coinbase is a fundamentally strong company. It ended 2024 with $9.3 billion in resources, defined as cash & cash equivalents and USDC, up $3.8 billion year over year. Debt has been decreasing over the past several quarters, while the total debt capital ratio has been improving. Also, its higher times interest earned implies that the company can comfortably service its debt. However, Coinbase recently priced $2.6 billion convertible notes, which increases concerns about dilution and financial leverage.COIN’s Return on CapitalCOIN’s return on equity (“ROE”) in the trailing 12 months was 16%, lower than the industry average of 16.3%.The return on invested capital in the trailing 12 months was 10.1%, which compared favorably with the industry average of 5.1%. This reflects the insurer’s efficiency in utilizing funds to generate income.Mixed Analyst Sentiment for COINThe Zacks Consensus Estimate for 2025 earnings has moved 93.6% north but the same for 2026 has moved 7.4% south in the past 60 days. Image Source: Zacks Investment ResearchThough the Zacks Consensus Estimate for 2025 and 2026 revenues suggests a 7.2% and 8.7% year-over-year increase, respectively, the same for 2025 and 2026 earnings suggests a 7.8% and 18.2% year-over-year decrease, respectively.COIN Shares Are ExpensiveCoinbase shares are trading at a premium to the industry. Its 12-month forward price-to-earnings of 52.93X is much higher than the industry average of 24.91X. Its Value Score of D indicates a stretched valuation at this moment.Image Source: Zacks Investment ResearchParting Thoughts on COIN StockCoinbase’s efforts to accelerate growth in the crypto market, increase market share in spot trading on consumer and institutional trading platforms and improve trading experience, along with continued innovation, should help it accelerate growth. However, crypto asset price risk and lower volatility could adversely impact Coinbase’s operating results. A decline in the market price of Ethereum, Bitcoin and other crypto assets could hurt earnings, the carrying value of crypto assets and future cash flows. This may also affect liquidity and the company’s ability to meet ongoing obligations.Given a premium valuation, unfavorable ROE, projected declines in earnings in the current as well as next year, mixed analyst sentiment and a VGM Score of F keep us cautious on this Zacks Rank #3 (Hold) stock presently. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.See our %%CTA_TEXT%% report – free today!7 Best Stocks for the Next 30 DaysWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Interactive Brokers Group, Inc. (IBKR): Free Stock Analysis Report Coinbase Global, Inc. (COIN): Free Stock Analysis Report Robinhood Markets, Inc. (HOOD): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks