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Coinbase stock lost over 75% value

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Re: Coinbase stock lost over 75% value

#421

Post by smaryjerry »

nostrademons wrote: post #368
bb88 wrote: post #334

Earlier quoted context omitted.

> 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…

That's a really rough valuation heuristic that can lead you very far askew. 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 c…

P/E ratios have been pretty insane lately and just came back down to earth and I think your right that interest rates have a lot to do with stock price valuation of growth stocks but it’s not just growth stocks taking a beating right now. Why not grab a safe 3% return investment instead of a risky 6% return investment - or if both are 10% in your example I wouldn’t even consider that a value stock because it would be riskier with no reward. Of course a lot of the growth stocks have negative eps so near impossible to use this measure.

Re: Coinbase stock lost over 75% value

#422

Post by shahmeern »

londons_explore wrote: post #404
shahmeern wrote: post #400

Earlier quoted context omitted.

Please stop spreading misinformation. 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 yo…

The counterparty for the bid price, and the counterparty for the ask price are commonly the same person. So when you execute both trades, you are putting a literal $20 into their pocket.

That's fair but calling it a fee is disingenuous, especially considering your contrived scenario of buying and then immediately selling

Re: Coinbase stock lost over 75% value

#423

Post by nr2x »

bradlys wrote: post #271
nr2x wrote: post #53

Earlier quoted context omitted.

My personal rule is living expenses should be salary-bounded, as you can’t have security if you’re living off equity. But everybody assumes a risk level they’re comfortable with, this works for me.

Probably works in some parts of the country but it doesn’t work in SV unless you’re mega-wealthy already and paid off your house.

I do live in SV, not wealthy to start with, and rent my home. About half my comp is equity and it goes to paying down student loans, savings, and the like.

At current housing prices my rent is 1/3 of a mortgage payment. Buying in this market doesn’t make sense.

Re: Coinbase stock lost over 75% value

#424

Post by nr2x »

closeparen wrote: post #366
bradlys wrote: post #319

Earlier quoted context omitted.

Most people in SV do this. So, it’s pretty normal actually.

Then there's going to be a lot of foreclosures soon.

Yup, I think the housing market got totally overheated on the back of RSU values going through the roof.

Now that even Apple and Google are well off peak, I’m super curious what happens next.

Re: Coinbase stock lost over 75% value

#425

Post by nr2x »

closeparen wrote: post #395
nradov wrote: post #381

Earlier quoted context omitted.

That's just totally disconnected from reality. The majority of Silicon Valley homeowners don't receive any equity compensation. You should walk around and talk to regular people sometime. (The numbers may be different if you look solely at recent buyers in a certain limited set of neighborhoods.)

Those are the "already mega-wealthy." Their mortgage bills are low because they have enormous home equity.

And property taxes pegged to the value of the home in 1985!

Re: Coinbase stock lost over 75% value

#426

Post by shahmeern »

smaryjerry wrote: post #419
shahmeern wrote: post #400

Earlier quoted context omitted.

Please stop spreading misinformation. 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 yo…

Is that misinformation or not? Don’t market makers make their profits by collecting some difference between bid and ask? I recall a video from Warren Buffett explaining that it was criminal that firms like Robinhood get away with calling it zero fee trading.

Disclaimer: I used to work at robinhood

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 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)

Re: Coinbase stock lost over 75% value

#427

Post by nostrademons »

baskethead wrote: post #388
nostrademons wrote: post #368

Earlier quoted context omitted.

That's a really rough valuation heuristic that can lead you very far askew. 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 c…

A PE ratio of 30 for a value stock? You have got to be kidding me. Average PE ratio for the SP500 was about 15 until the pandemic.

It's all dependent on interest rates, because that sets the discount rate that all investments are compared to.

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 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.

Re: Coinbase stock lost over 75% value

#428

Post by ncmncm »

tradertef wrote: post #379
ncmncm wrote: post #265

Earlier quoted context omitted.

Difference is that the internet was and is a real thing with real value. There were a zillion dotcoms thrown up onto it that offered no such value. Crypto coins and NFTs are like the latter.

Generalizations are not generally valid. You are putting whole ecosystem into the same bucket. Yes, there are a lot of shitcoins.. But there is also Bitcoin.

Which is, itself, down 50%. Only 50% left to go.

Re: Coinbase stock lost over 75% value

#429

Post by Tiktaalik »

pingeroo wrote: post #197
StanislavPetrov wrote: post #86

I remember the "dotcom crash" of 2000, after which all of the scuttlebutt was about how the internet was a fad and all the related investments were just a giant bubble. The rhetoric I'm hearing today about crypto is strangely reminiscent. How it will turn out, nobody knows, but humility is warranted if history is any guide.

Not sure why you're getting downvoted. I wasn't even alive during the dotcom bubble but every account I've heard of it sounds similar to the cryptosphere. Insane valuations. People blindly jumping on the bandwagon. Money blindly being thrown around left, right, and centre towards anything 'web3'. Plagued with tremendous amounts of arrogance, greed, and hubris. People buying Lamborghinis and the like. Classic gold rus…

It is not the same (I was alive during the dotcom bubble).

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.

Re: Coinbase stock lost over 75% value

#430

Post by kolbe »

sushid wrote: post #162
kolbe wrote: post #146

Earlier quoted context omitted.

However, the spread they make on their transactions gets wider as price action is more volatile.

Can you explain? A wider spread means less efficient markets which means fewer transactions which means lower revenue, no?

Would you rather $1 per BTC on 1m BTC transacted or $10 per BTC on 500k transacted?
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