San Francisco-based Coinbase Global, Inc. (COIN) offers financial infrastructure and technology to the cryptocurrency industry in the United States and across the world. The company provides retailers with the primary financial account in the crypto economy, a marketplace with a pool of liquidity for institutions to transact in crypto assets, and with technology and services that enable ecosystem partners to build crypto-based applications and securely accept crypto assets as payment.

The stock is down 59.4% in price over the past year and 34.4% over the past month to close yesterday's trading session at $122.55. In addition, it is currently trading 66.8% below its 52-week high of $368.90, which it hit on Nov. 09, 2021.

While COIN benefited considerably from the boom in crypto trading in 2020 and 2021, producing record revenue and profits, the performance of crypto assets has been lackluster year-to-date, and there have been concerns about rising competition. This could further impact COIN's price performance in the coming months.

Here's what could shape COIN's performance in the near term:

Impressive Financials

COIN's total revenue grew 327% year-over-year to $2.49 billion for the fourth quarter, ended Dec. 31, 2021. The company's monthly transacting users (MTU) increased 307.1% year-over-year to 11.4 million. Its trading volume increased 765.8% year-over-year from the same period last year to $1671 billion. While its net income was $840.21 million, up 375.3% year-over-year, its adjusted EBITDA increased 331.3% year-over-year to $1.20 billion.

Stretched Valuation

In terms of forward non-GAAP P/E, the stock is currently trading at 30.35x, which is 190.6% higher than the 10.44x industry average. Also, its 3.60x forward EV/Sales  is 25.3% higher than the 2.87x industry average. Furthermore, COIN's 3.91x forward Price/Sales is 33.8% higher than the 2.93x industry average.

POWR Ratings Reflect Uncertainty

COIN has an overall C rating, which equates to a Neutral in our proprietary POWR Ratings system. The POWR ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight different categories. COIN has an F grade for Stability and a C for Value. The Stability grade represents higher stock volatility than its peers. In addition, the company's higher than industry valuation is in sync with the Value grade.

Of the 156 stocks in the F-rated Software – Application industry, COIN is ranked #96.

Beyond what I've stated above, you can view COIN ratings for Growth, Momentum, Quality, and Sentiment here.

Click here to check out our Software Industry Report for 2022

Bottom Line

Analysts expect its revenue and EPS to decline 101.3% in the current quarter (ending March 31, 2022) and 97.7% in its fiscal year 2022. So, we think the stock looks significantly overvalued at its current price level, and thus it could be wise to wait before scooping up its shares.

How Does Coinbase Global Inc. (COIN) Stack Up Against its Peers?

While COIN has an overall C rating, one might want to consider its industry peers, Commvault Systems Inc. (CVLT), Rimini Street Inc. (RMNI), and Progress Software Corporation (PRGS), which have an overall A (Strong Buy) rating.

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