Coinbase stock lost over 75% value
google.com
google.com
It's going to be a rough time for anyone who had high hopes for their equity compensation.
($NET bagholder)
If you don't recognize the name, he founded Vanguard and the first index fund.
But everybody assumes a risk level they’re comfortable with, this works for me.
Now that even Apple and Google are well off peak, I’m super curious what happens next.
(The numbers may be different if you look solely at recent buyers in a certain limited set of neighborhoods.)
At current housing prices my rent is 1/3 of a mortgage payment. Buying in this market doesn’t make sense.
I agree with you but I took parent to imply startups & options
I'm surprised Google hasn't been more aggressive in this space, but Google cloud strategy has never made terrific sense to me.
Is it a correction to true value or an over-reaction to market sentiment?
> They are like the water supply, to the restaurant.
Even actual water companies get overvalued. Just look at American Water Works or Essential Utilities Inc stock.
All these employees could just leave if they wanted to. If you are a public company and your worth is so heavily dependent on talent, how do you mitigate that risk?
Is there a future for football player style contracts for engineers, where you are tied in to a team for N years, and with a requirement that another team has to pay big money for your contract if they want you to transfer?
i.e. golden handcuff equity grants with vesting schedules? Top performers in highly demanded areas can have some or all of their remaining equity bought out.
It definitely ties the value of the contract to the stock price. In a way the company is leveraging its stock - significant declines hurt talent retention, and significant gains help it.
I’m talking about Company X having to pay off Cloudflare-the-business if they want Team Cloudflare’s top network engineer to transfer to Team Company X, mid contract.
Network engineers are comparatively far more expendable and easily replaceable. It's not nearly as hard to learn as NFL level football.
How many Principle Engineers are there at the FAANGs? How important are they to the business, and how long did it take them to get to that level, in their careers?
http://www.newyorker.com/magazine/2002/07/22/the-talent-myth
Good, let it fall much more.
Coinbase was never a darling for anything but the out of touch uninitiated (marks) in the 'crypto markets' because only MTGOX was ever this incompetent and amazingly useless at what they do. Be it from canceled purchases, reversed transactions, inappropriately flagged, suspended, or canceled accounts etc... There history is one of perpetual incompetence with little to save them other than being backed by the tech oligarchs and VC.
Armstrong's appearance on the all in podcast just reminded me why their is so much distrust in this space as a result of people like him, all they wanted to do was virtue signal to one another about being a 'non-woke' worksplace. But they never addressed this very clear and glaring issue: the IPO was over-inflated and their relevance in this space is based on convenience of an ever smaller demographic. I wish they got to how and why they acquired 21, but that would require a level of transparency that I don't think he is capable of.
I hope Jack eats Armstrong's fucking lunch and just fights a war of attrition from his cut of the Twitter Buy out by Elon.
I don't think there is a place for Armstrong in this ecosystem since he sided with Ver and set us back for several years, but it's with absolute schadenfreude that I look at this YC backed unicorn go down in flames.
Just like how Altman turned out to be a conman pushing Worldcoin, Armstrong is of same SV insider ilk.
What that looks like maybe horrible since they hold so much BTC, despite supposedly being advocates of the BCASH fork during the Segwit/USAF wars.
Where I felt it was a but empty was on the part where he talked about the mission. I felt like he's trying to find a reason for them to exist when in fact their success until today is from retail investors pumping Crypto. I don't think there's much good in the world coming from their actions.
PS I don't have any Coinbase shares.
Are you at all involved in the Fintech or Bitcoin ecosystem? This is a critical component of why I view him as such, his co-founder is ex Goldman Sachs. He is backed by the SV VC Powerhouses that these 3 supposedly lambast, but have had dealings with in the past (Sequoia et al).
> I saw Armstrong as a driven guy that puts business first. I don't think the "non-woke" communication was intentional, it was forced. The guy wanted the company to move forward and saw himself discussing other things that were not important for the future of the company.
That means his optics worked, likely only on the uninitiated to this space because this was extremely political in nature, again look back to the Segwit/USAF wars we went through. It's all there, Armstrong sided with a bunch of conmen for his own personal gain and still has one of the largest BTC holdings. This was the equivalent of insider trading on top of racketeering.
> Where I felt it was a but empty was on the part where he talked about the mission. I felt like he's trying to find a reason for them to exist when in fact their success until today is from retail investors pumping Crypto. I don't think there's much good in the world coming from their actions.
This is a matter of interpretation, and depending on what period you're talking about in Coinbase's history it can vastly differ: initially they were onboarding many more into something seemingly too arcane for the average retail customer to grasp after the collapse of MTGOX this was necessary as most exchanges operated on too far of the fringes. What they did was simplify this for the layman, who couldn't understand the initial complexity of the tech: you use to have to run your own node on QT before webwallets/mobile wallets were a thing. This was daunting for me when I began, too, but I unlike most became obsessed what this tech's possibility ever since and it began my career into tech.
I won't go into why Bitcoin has helped many more than the average affluent HN tech worker will ever grasp here, but in short their ability to onboard many into this ecosystem allowed for immense upward mobility for generations that have been only marginalized and relegated to poverty in even developed nations due to inflation and higher costs of living and stagnant, if not negative/declining wages relative to expenses.
Coinbase many lists alts, most of which are pump and dump schemes for sure, but the fact remains that even in this current down-turn if you DCA into BTC for several years prior to 2021 you'd still be looking at really nice returns.
I'M MAKING IT VERY CLEAR I WANT TO SEE THE DEMISE OF COINBASE!
I wont bore you with the tech side either, frankly I think it's not worth my time and you can look at my post history of you want more context about why that is, but the short of it is Armstrong represents a point in which VC and it's expand and moat to IPO and cash model was institutionalized in what was before fertile ground for experimentation trying to move away from this model--BTC-e still remained the most reliable exchange until it was seized by the Feds outside of it's jurisdiction.
I swear, we can write like 50 movies of just the last 13 years of BTC history, but all anyone wants to focus on is Silkroad.
Out of all the tech companies that IPO’d in the past few years, Cloudflare is one that the most potential to excel long term. Developer sentiment towards Cloudflare is comparable to Apple fanboys of the previous decade, and their products are legitimately good, backed with tangible assets (datacenters). They also have consistent growth quarter over quarter.
It’s surprising how many not as impressive companies (pre-revenue!) got away with entering the public market last year. Good company or bad company, they all seem to be sharing the same freefall.
(Disclosure, I own NET)
If you think this, you should be happy and buy more of the stock. I don't know enough to say if I think it's a good idea, but if you do, don't be sad, buy more of it.
I suppose it comes down to conflicting opinions/strategies - I'd be way over-allocated in Amazon & Cloudflare (and probably 'tech' and the USA) if I always did.
Good companies come and go. Good companies of old no longer exist because the world changed. Some companies are good for awhile, and then lose their way. Nuance abounds.
Not putting words in the parent commenter's mouth, but maybe a different way to say this is that Cloudflare is a good product. A product can be both great, and not viable under some conditions. The two are not mutually exclusive.
Abbott Laboratories
Circuit City Stores
Fannie Mae
Gillette Company
Kimberly-Clark
Kroger
Nucor
Philip Morris
Pitney Bowes
Walgreens
Wells Fargo
https://www.harpercollins.com/products/good-to-great-jim-col...
Are there any consistent patterns which allow us to reliably predict which good companies will contine being good longer term?
My belief in their goodness, or lack thereof, has absolutely nothing to do with their finances. It is the same reason I won't invest in Crypto currencies or NFTs. The line may be going up but so is the global temp. Not good.
There are an incredible number of reasons why they might not be able to invest right now so perhaps it isn't the best thing to immediately goto implying they don't even have a savings account.
(Disclosure also, I own NET)
Lots of people who figured they could borrow against their rapidly skyrocketing holdings that are all receiving margin calls at the same time.
As far as them going bankrupt seems pretty unlikely as some people are saying. Remember - Paypal, Yahoo, Google, etc. amongst many survived through the dot com bust. Cloudflare can generate positive cashflows anytime they want by stopping future development.
Battle of cloud is intensifying: https://www.economist.com/business/the-battle-of-the-computi...
HIGHLY recommend looking at Stackoverflow architecture: https://stackexchange.com/performance
https://nickcraver.com/blog/2016/02/03/stack-overflow-a-tech...
Technology and society has ways to build up layers of abstraction. It takes some realization, hindsight, genius and humbleness to cut down the overgrowth and pick the fruits, plant new seeds.
These resources are rarer and more expensive than increasing cloud bills (for now).
But at one point [1] it was hyped very quickly and had to sell most of it at >$200 after asking and reading the responses from this [1] it was really not a surprise to see through the hype at the time and why it crashed so quickly. [1]
I consciously stay out of negative threads about Cloudflare because I feel way too attached to them.
https://a16z.com/2015/05/15/a16z-podcast-why-saas-revenue-is...
The money you have in now should be held.
I’m not sure exactly what he meant, I read it as “we will be near the bottom in 2-3 years”. Recovering means something different than recovered.
https://www.theguardian.com/business/2015/apr/23/nasdaq-new-...
It took 15 years.
In 2012:
- Apple and Google were the dominant mobile platforms
- Microsoft was dominant on the desktop
- Amazon was the dominant retailer and the dominant (but nascent cloud provider)
- Google was the dominant search engine and YouTube was dominant
- Facebook was the dominant social network
-Microsoft has been one of the top five companies by market cap since 2000 and Apple has been in the top 5 since 2011.
- Intel is still the top PC processor manufacturer.
If you saw a modern smart phone in 2022, would you really be impressed with the iPhone 12 ProMax compared to the iPhone 5s?
I was using a 2 year old Core 2 Duo 2.66Ghz Dell with 8GB RAM, gigabit Ethernet and a 1920x1200 (not a typo) screen. That computer can still run the latest version of Office and Chrome today.
In other words, the landscape hasn’t changed that much.
Now compare 2012-2002.
Have there been any new widely successful tech companies emerging since Facebook in 2009?
https://blogs.gartner.com/merv-adrian/2022/04/16/dbms-market...
Isn't Cloudflare an obvious example?
I’m not saying either is bad software.
If you consistently invested during that period you'd be doing well.
After losing 15-20%, I decided to sell. Figured I'd buy again after it dropped further. Guessing when it's 80-90% down from peak I'll end up repurchasing.
It's probably a great time to be getting into finops, and I don't think CloudFlare's fair value is anywhere remotely near $18bn.
I think we'll discover before the end of this year just how many of the tech darlings were largely side effects of the poisonous sandbox constructed by the US fed.
?? Poisonous sandbox?
Is this an awkward way of referring to money printing? Or the low interest rate environment?
If you want to continue the sandbox metaphor, which I do like, "playing in the Fed's sandbox until the bottom fell out" might work. Or even "toxic sandbox".
poisonous (adj.)
[...]
2. (figuratively) Negative, harmful.
Synonym: toxic
Poisons are something you do to yourself (usually by ingestion), venoms are injected by the other organism (such as a snake bite).
The Caddyshack Baby Ruth scene seems apropos.
Fed Floaters. Everybody out! Pool's closed.
All toxic substances are poisonous. A toxin is a poison produced by a living cell or organism.
Poisonous Sandbox was elegantly simple, pithy even, and quite appropriate.
"Toxin" is a newer invention, derived from "toxic" by adding the biochemistry-related suffix "-in" to indicate toxic substances of biological origin.
In my experience that is not a correct statement for the target demographics.
What indicates a coming tightening of hiring soon?
Aside from that, Cloudflare is growing revenue not just overall but also on a per-customer basis, due to the expansion of products.
Once Cloudflare releases products that allow it to more directly compete with AWS, it'll be repriced by investors. They've already stated that this is their goal. They're missing a compute product and a real database or KV store solution to be at the bare minimum. I think we'll see both, and at least one will happen in the near future.
Cutting infra costs is not easy, especially when the costs of lapsing security spend are so high (how much did Equifax lose on reputational damage + cleanup work?).
($NET shareholder)
I know it's down a lot but I'm asking because it started from such a loft valuation I have no opinion on NET but a lot of the cloud bubble stocks of the last few years needed to come down by 95 percent IMO to get closer to intrinsic value. To do that they'd first drop 90 percent, then drop another 50 percent from that point. Hence I don't know which you meant.
A reasonable starting point might be where it was prior to Covid QE and rate reductions (-61%), add one company-specific shock due to missed growth expectations (-30%), maybe +20% for real growth experienced over Covid in the meantime, and that already leaves us with $6bn, before accounting for the effect of the fed beginning to unwind their balance sheet (which starts in June, initially at around 1% per month)
Incrementally buying at $18-$25 would definitely feel tempting in that scenario, assuming the fed delivered its claimed targets, and only with the understanding the IPO price should not be considered a floor.
This is all before considering the reality their product isn't much more than a commoditized fly on the windshield of bigger vendors, and it's easily possible to imagine a Lightsail-like competitor appearing in the meantime.
But cloudflare is also pretty cheap for many things, so that may bring in some more money from people downsizing from something like akamai, could it not?
(I'm no expert just speculating)
Hoping to take advantage of the dip to buy into some other great companies that I missed and buy more Cloudflare too.
I'm looking to get positions in Crowdstrike, ZScaler, Snowflake and Palantir if I can find good entry points. All have been too high to justify for the past couple of years.
I've been in Cloudflare since about $30 and sold about 20-30% when it was at $200, so I figure I'm playing with house money there and have no plans to sell at any point. I would like to buy back though.
Boiling it down, I think institutional investors do not fundamentally understand Cloudflare's technical raison d'etre.
As you implied, NET gets lumped in with its IPO class of "tech stocks", but is fundamentally different, for the reasons you gave. They have a legitimate moat, differentiated technical talent, and are fishing in a growing pond.
Similar to the Amazon story, it seems inevitable that a company shaped like NET is going to make oodles of money in the next ten years provided they have the right leadership and capital structures. NET has all that, and a several-years head start. On and up.
Might put some fun-money in Cloudflare
https://www.nerdwallet.com/best/investing/online-brokers-for...
Try buying $1000 worth of any stock and immediately selling again. Notice how you now only have $980. You effectively paid a $20 fee. It was just a hidden fee in the spread caused by whoever executed your trades.
There are two prices, the bid price (how much someone is willing to pay) and an ask price (how much someone is willing to sell). When you submit a market order, you usually get a price close to the bid (if you’re selling) or the ask (if you’re buying).
The 20$ difference you describe is the spread - not a fee taken by the brokerage, market maker, exchange. Whoever is executing your trade isn’t pocketing the 20$.
So when you execute both trades, you are putting a literal $20 into their pocket.
The consolidated bid and the ask across all exchanges make up what's called the NBBO and every one (market makers, exchanges, etc) are required to give you a price equal to or better than the NBBO. So if the bid for SHOP is say $50.00, the ask is $50.10, and you are selling SHOP, its illegal for anyone to give you a price < $50.
Market makers make money by buying low and selling high (and vice versa). They typically look for small movements not large ones. So if a market maker bought SHOP at $50, they would try to sell it at $50.10. This is what everyone means when they say a market maker makes money off the spread.
This strategy works really well when you have large random order flow, which is why market makers want to pay brokerages for order flow. They incentivize brokerages, even ones that charge commission) by giving pfof (payment for order flow) and price improvement on top of the NBBO. This price improvement is passed on directly to the customer.
IIRC, brokerages have a best execution obligation. So they are required to try and execute orders in a way that gets customers the best prices. I don't know about other brokerages but at Robinhood, pfof wouldn't go into our order routing decision at all. We would send orders to the market maker using a model which only considered the historical price improvement they gave our customers.
Because Robinhood order flow is so lucrative for marker makers in aggregate, they were willing to give us really good price improvement. So the execution for options and equity orders at Robinhood be better than other brokerages (even ones you pay commission for)
Cloudflare doesn’t own anything significant in the form of data centers. Having small rented footprints at IXPs across the globe is not an asset, it’s just a cost. I’m not downplaying the difficulty of getting it setup but there is no intrinsic value in having it if demand for their product collapses.
> Developer sentiment towards Cloudflare is comparable to Apple fanboys of the previous decade
This is far from true. People begrudgingly pay protection money to cloudflare to protect themselves from DDoS attacks. Very few significant operations depend deeply on the cloudflare stack. It has not been the AWS alternative it set out to be with the launch of its lambda like edge compute products.
An AWS, Azure, or Google DDoS protection product could eat Cloudflare’s market in a hot minute. Cloudflare can’t escape being a “feature” of a cloud provider.
(Disclosure, I sold out of Cloudflare at the end of the year when it failed to gain significant traction.)
I don't understand this point. If there's a risk that demand will collapse isn't it better not to own the data centers? By renting CF can reduce their costs quickly in the face of falling demand. That's a feature.
An AWS, Azure, or Google DDoS protection product could eat Cloudflare’s market in a hot minute. Cloudflare can’t escape being a “feature” of a cloud provider.
This is also true of any other software company though - at some point a bigger company might offer whatever product as a feature. It's just a risk of building a software company - what we build is largely straightforward to copy. That doesn't mean there's no value in software as a product though.
But it’s not an asset. Do you know what an asset is?
When whole species get torn down in one solar year bc some other species began to adopt a winning adaptation, that seems prone to overshooting (excessive curve fitting to the first derivative), with odd/suboptimal outcomes as no surprise.
Akamai is the leading global CDN provider, want to guess how many data centers they own? Sure, owning a data center is an asset, but it’s also a liability too.
As for 'meaning something bad' and not being sure about it, why would you even respond? It's just a discussion board. Nothing we say here is important, it's not worth a glancing though to contemplate if someone somewhere on a comment section may or may not have meant something ill mannered towards someone else.
And in all self awareness, I have no clue on earth why I am downvoted, usually in retrospect it's obvious, but when discussing 'Bitcoin' one can never really tell (not that it matters).
Because everyone thought you were trolling with a dog whistle: “We need something (a bomb?) for you (Russia)”.
I mean, I'm cynical but I couldn't even fathom that even in retrospect.
Such as?
To be bluntly honest, I responded because I thought you might be advocating for violence against someone entirely based on their nationality |OR| that I completely misunderstood what your comment was about (which I definitely did here; sorry for interpreting your message the wrong way).
Even with it just being a discussion board, I would really regret not at least leaving a comment asking for clarification. I'm glad I did in this case, as I turned out to be completely wrong :)
It can be (and is, although not everywhere) used, for cogeneration - residual heat from any thermal plant used for district heating/industrial heating processes.
Bitcoin doesn't produce anything, Coinbase does.
What you're describing is speculating / gambling, betting on some kind of soaring event happening.
Because their growth trajectory is insane. They are making a ridiculous amount of money & will be around for a long time. The real question is how MUCH should you pay for the stock? It's worth something, but I haven't tried to value it & I have no idea what it's worth. More than zero, less than infinity.
Thankfully a lot of people do know how to price the value of a stock. A good number to target is a P/E ratio of 30 for a tech stock in growth mode.
Tomorrow COIN releases their earnings report. EPS is expected to be 0.17% of the share price. So I would expect the blood bath to continue on COIN stock. If I had money available, I would buy put options tomorrow on COIN.
A P/E of 30 is appropriate for a value stock (steady earnings) at 3% interest rates. (How did I get that figure? P/E of 30 is about a 3% earnings yield, and if earnings are steady the stock is effectively equivalent to a bond at that rate.)
For a growth stock, you have to ask yourself "How much growth do I believe is left in this market?" A company that's growing at 20% annually but has only a year left before it plateaus (like FB or NFLX last year) should trade at about a 20% premium; that'd imply a P/E of 35. But a company that's growing at 20% annually and has a decade of growth left (like FB at IPO) should trade at about 6x that original multiple, for a P/E of 180. An earnings yield of 0.17% implies a P/E of about 600, which implies that earnings should grow 20x before the company reaches a steady state. That's a little high but not totally out of the ballpark for Coinbase (earnings: $3B, market cap $21B) if you assume its comps are companies like Bank of America (earnings: $32B, market cap $293B) or J.P. Morgan Chase (earnings: $48B, market cap $363B).
Also note the effect of interest rates on valuation. At 10% rates, a value stock should have a P/E of about 10. For a growth stock, the effect is much more pronounced, because in the decade that it takes for the company to start raking in serious cash, that bond will be worth 2.6x as much and the company's long-term earnings need to be discounted accordingly, on top of the lower steady-state P/E. That's the real reason why tech growth stocks shot up so high after the pandemic and now have crashed so hard. With higher rates, large cash flows in the future are worth relatively less because you can earn more with safe investments now.
A P/E of 30 is an earnings yield of about 3% (1/30). A steady cash-flowing stock will compare favorably to any bond with an interest rate of < 3%. When bonds are yielding < 3%, that's a good deal.
A P/E of 15 is an earnings yield of about 6% and change. When rates are in the 6% range, this is fairly valued.
A P/E of 6-10, like what was considered good in the late 70s, is an earnings yield of 10-18%. Sure enough, in the late 70s when you could actually get these P/Es, interest rates were around 18%.
There's math behind these rules of thumb. It all comes down to discounted cash flow analysis - if you understand the inputs that go into that formula, what the market does makes a lot more sense.
Bitfinex, which is incorporated in the Cayman Islands, is an example of your “ideal” bank. It has seen its US correspondent banks flee several times, leaving Bitfinex users unable to withdraw USD.
Coinbase is a US regulated exchange which US banks are much more willing to cooperate with since they perceive it as safer than working with some Cayman Island outfit.
Any other things that look like good buys under the market crush?
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...
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.
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.
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.
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
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
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
That is an actual possibility.
For the last few months my monthly contribution gets swallowed up by the losses and the balance hasn’t moved lol
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.
And the best legal way to do that is to be a customer or prospective customer and observe that there are no other ways to accomplish what you want to.
There're a number of beaten-down tech companies that IMHO would pass that test: NET and COIN are two of them, ZOOM, probably SHOP as well (the small businesses I know on them swear by them). I'd stay away from Affirm, Peloton, Netflix and Roblox, though - those are the ones where, as a customer, I just don't get much value out of them and could easily go elsewhere.
No point getting into a Netflix original, it won't make it to s02
Admittedly this list includes shows that have ended in addition to those that were cancelled. Those will mostly have more than one season. Pinch of salt.
src: https://en.wikipedia.org/wiki/List_of_ended_Netflix_original...
Netflix was not as aggressive as they needed to be in locking down must-see brands to 1) keep subscribers or 2) better negotiate with the content players.
I was saying this 6 months ago on Twitter and was saying it here https://news.ycombinator.com/item?id=29787420
In hindsight stock performance was the biggest advantage they had over competitors, now they have to compete with companies with bigger catalogs and more cash flow (e.g. disney parks)
Am I stupid? Or is the world stupid?
It seems strange to me, but people do this with random online fitness classes, so it's not unheard of.
But if you have the Peloton Tread treadmill, it's even worse, you literally can't use it without a subscription due to a new "safety feature".
At this point, returns and people just burning/destroying their Pelotons are the only risk.
In addition two things made me think about it:
- The kind of people who buy pelotons are usually not the people who worry about that amount of monthly charge and may keep it aspirationally
- The new game they put out (kind of guitar hero-y) actually doesn't look half bad, and the product itself is quite polished.
- In addition to buying the bike, people often buy one or two pairs of clip in cycling shoes -- Peloton could actually start becoming a go to for riding gear and have quite the audience to sell to from day one.
Anxious to read their recent earnings report tomorrow.
That's why I went with a Keiser bike instead of Peloton, it was the same price for the bike, but no subscription needed, and I can easily use it with any spinning app. Plus I didn't like having a big expensive display on the bike, the Keiser has a simple 4 line LCD display.
I like the Peloton instructors, so I subscribe to the Peloton service, but I only pay $13/month for it (which makes the $40/mo they charge to Peloton bike owners seem like even more of a ripoff). I track my workouts with my watch, so if they raise the price too much, I'm not tied at all to Peloton and I'll just switch to another service.
I think you’re more of a power user (and willing to tolerate set up pain) than most of the customer base would be, but how easily you’ve found a solution and competitor that works well with your method has been eye opening
I think this is a very limited market that may be getting close to saturation. Most people don’t want to spend $40 a month to own a bike
A bit more of my very basic reasoning was that at current prices the company was being as if it hadn't shown progress at all in the last ~2 years. They have at least sold units, added subscribers, and that's gotta be worth something even if a bunch of it is pulled forward.
Actually for a SaaS service (we'll leave aside whether it's worth it or not :), this is one of the best things that could happen right? If possible you want that LTV to be pulled forward so you can try to reinvest it in the business or make moves earlier rather than later?
A credit firm whose customer base is primarily folks who have to finance their small ticket item purchases in order to afford them is going to have a tough time in a rising interest rate environment. Their margins will compress as their cost of capital rises, and their default rate will rise as their borrowers slowly approach insolvency in a recessionary environment. I would be cautious about investing in anyone who is lending to borrowers who don't have sterling credit and/or strong balance sheets and durable cashflows this late in the cycle.
These are 4 week loans, exposure to any given customer is small. And in a recession demand for these loans will increase.
> 43% of Gen Z users have missed at least one payment, according to a survey by the polling site Piplsay. Of Gen Z consumers who used a point-of-sale loan for something they needed, 30% missed at least two payments, according to a survey by Credit Karma.
https://helpcenter.affirm.com/s/article/term-lengths
https://investors.affirm.com/news-releases/news-release-deta...
https://www.sfgate.com/news/article/influencers-lead-Gen-Z-i...
I did sell my crypto, which would've been a better story if I had more than $1000 of it.
If you can predict a range for the future earnings and discount them and if it is underpriced , do buy :) .
Thus, transactions will continue to trend down and $COIN will suffer.
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.
Also this is the chart you've mentioned about the negative tax provision.
https://finance.yahoo.com/quote/COIN/financials?p=COIN
Click on the quarterly link to see the -700M tax provision.
Have there been any successful sustainably profitable tech companies to go public since Facebook?
AMZN wasn't profitable for 7 years, then fell to unprofitable again in 2012 and 2014[2].
AAPL was net in the red from 1996 to 2003[3].
So, were all these companies "Ponzi schemes" during the eras where they were investing in growth?
And if your only qualification is to "be profitable" for something not to be a Ponzi, then why are you here ragging on places like Coinbase? Coinbase is a 5.7 P/E company with $4b in net cash right now.
[1] https://www.fintopea.com/quote/FB/income-statement
Everyone though that Amazon would never make a profit. Even today most of Amazon’s profit comes from AWS.
If your definition of "Ponzi Scheme" is simply that a company is profitable the moment they go public, then not even the original Ponzi Scheme was a Ponzi Scheme.
Disclosure: i just loaded up on this today
You'd have to normalize of the giant tidal waves of financial flows to see of YC IPOs are good or bad thing in reality.
But that doesn't apply to Coinbase because, at its core, Coinbase should be a transactional business that is a proxy for the size of the crypto market (or, more specifically, the crypto trading volume).
I don't know enough about the financials of Coinbase however. It could be they have risks unrelated to their transaction business. For example, Robinhood was almost made insolvent by excessive exposure to GameStop. Does Coinbase engage in some weird margin business where they're exposing themselves to proprietary risk? If no, it seems like a good buy.
But this is hopefully a much smaller market than the current one.
Is it good for those things if you have to launder it AGAIN (with fees) just to get it back to a practical fiat currency?
Plus KYC and compliance checks for any exchange in the USA and EU (dunno about the rest of the world) practically bans anything iffy.
Compliance requirements have been stricter in Coinbase from my point of view than my banks...
Here is a fun article as a counter point: https://www.coindesk.com/markets/2021/07/13/dont-blame-bitco...
And my comment: Piracy and kidnapping of property existed long before cryptocurrency -- just google Somalian pirates. I don't have to reason about person kidnapping I assume.
Also: https://en.wikipedia.org/wiki/Ransomware#Encrypting_ransomwa... please read the history of ransomware. I guess all the criminals of the past since 1989 need to use time machines because they could not possibly do ransomware pre-cryptocurrency... /s
P.S. Downvoting because you disagree with a comment that addresses another comment is not really polite.
A major crash like we’ve been seeing in both the traditional market and crypto space means there is less money coming in, less money moving around, and less fees for Coinbase. And with a persistent recession you’re not going to see people coming back in for a while.
Keep the destruction coming sellers, it's appreciated.
Also not smart when you use credit to buy ahh good times
I thought I was smart turning credit into cash but I also was losing money through fees.
Anyway after messing around with my own trading bots (at loss not using smart algos or anything) I'm not sure if it was worth it... fun project I guess/code practice. At least for that I was just messing around with small amounts eg. <$100 per account (about 10). But if you don't have money to do day trades crypto is cool for that.
oh yeah I'm currently poor so I'm definitely no financial genius
In that spirit, coding practice is probably a good thing and was probably worth the money spent.
They/we were saying that many of the businesses that were being heavily invested in were unsound because they lacked a real plan towards profitability. Many businesses had no chance of turning profit, but were VC funded like crazy. I worked at a company that was doing "group buy" purchases and the product themselves weren't really getting real group discounts, so they just burned investment money to discount them. Literally buying customers under the thought that getting scale would just eventually solve the problem. And then the whole house of cards fell apart.
It wasn't until a few years later, when Google figured it out with AdWords, etc. that people started making real money.
There's no inherent reason to assume that this will happen with cryptocurrency.
Also, the NYT is often garbage.
https://fair.org/take-action/action-alerts/new-york-times-re...
Crypto coins and NFTs are like the latter.
In contrast to bitcoin/etc, it was always clear how broadly useful the internet would be.
Even while companies with inflated valuations like eBay were being battered, a broad amount of the mainstream population was using the sites every day and loving them.
It does not feel the same with cryptocoins, where owning an NFT Ape remains some peculiar niche thing and typical people have no relationship with cryptocoins at all.
> expend money with the expectation of achieving a profit or material result by putting it into financial plans, shares, or property
None of that says "long term"
But of course, by a number of other definitions, it is. It really just depends on what yours or someone else's frame of reference is.
if you're going to be pedantic, at least add something to the conversation.
You want some brutal, unrelenting misery with extreme bearish selling. That's when you strike your claim, that's when most of the future returns are set - that's the beautiful buy point. You don't get rich chasing and buying markets ever higher, you get rich buying cheap while everybody else is busy running for cover, and then you sell back to them when they come back to pay N times what you did (and whether it takes six months or six years is irrelevant so long as the return is good enough).
it's cheap because it's riskier. The risk may or may not pan out - if it doesn't, you make a high premium on taking the risk. But make no mistake, a cheaper stock is the market indicating that the stock is risky. The alpha of investing is to know when the market may have mis-priced the business.
Value of BTC is what people will pay for it now. Value of COIN is the discounted value of all future cash flows, which is heavily correlated with what people will pay for BTC in the future. COIN is doubly-levered on interest rates: its future earnings are tied to BTC, which itself tends to drop when the stop market does, but those earnings are also discounted by the prevailing interest rate. When rates go up earning lots of money from high BTC prices in the future doesn't mean a whole lot.
Google went down from $3000 to $2270 in recent months. Affirm is down 27% ... today.
Is this because HN was cynical and hating on Coinbase that it would go no where and then it did?
*propped up is a bit complicated here, people are just buying these bundles of corporations without making any value judgement on them individually. More realistically though, Google is the one propping up a bunch of companies that aren't as actively traded but are still on the index. People you've never heard of like Leidos Holdings, or companies that make you deeply question the contents of the index like Bath & Body Works, Inc. and Norwegian Cruise Line Holdings Ltd.
So is Coinbase. Total market funds are the default index funds most people use, not the S&P 600.
https://www.pwlcapital.com/there-is-no-such-thing-as-an-inde...
No one holds the sentiment that Coinbase or growth stocks is a risk-free investment. Google on the other hand was held to the esteem of being cash / better cash equivalent. It's not.
Coinbase is a very successful business with actual earnings and a large profit margin, it's just people's opinions of its future income that have changed.
I have no idea if this is going to turn out to be the protracted downturn or again something we bounce back from. But there is definitely at least something different in the equation now that we have not seen for a long time.
I'm generally an optimist, but I'd say if people are buying this dip, at least do it with your eyes open and buy it slowly and steadily, being prepared that it could be a 5-10year recovery period.
(Xkcd reference: https://xkcd.com/1656/)
We'll see what happens in earnings today.
I can’t believe that real friends and family members that I know seriously invested in Dogecoin.
I can't fault that.
If the market's willing to overpay, and the money goes the people who actually built a company, where's the harm?
It's just a high risk high reward gamble as everything related to crypto
Initially it was 'reported' and estimated at $200 - $250 for the IPO price, but actually started trading at over $400 a share [0], which is the near top where the majority of retail entered and bought in at those prices.
After the first day of trading, it went down to $328.28 a share. [0]
So my warning was correct to not buy on IPO day or even anywhere near those prices.
[0] https://www.cbsnews.com/news/coinbase-direct-listing-100-bil...
I hope you made out like a bandit shorting the stock.