What Is Market Sentiment Telling Us About COIN?

One of the standouts of today's morning trading session was Coinbase Global, which logged a -9.5% drop and underperfomed the S&P 500 by -8.7%. The cryptocurrency exchange stock is now trading at $75.54 per share and is -29.7% below its average target price of $107.45. Analysts have set target prices ranging from $42 to $242 dollars per share, and have given the stock an average rating of buy.

The market is seemingly more pessimistic about Coinbase than its analysts, because its short interest -- meaning the percentage of its shares that are being shorted on an expectation of a price decline -- is quite high at 19.6%. The float includes only shares that are available for public trading, and excludes preferred shares held by insiders.

Short selling stats when an investor borrows shares of the target stock, and then sells them. The investor hopes for the price to decline, so that they can buy those shares back at a lower price in the future. Once they do, they can return the borrowed shares to their broker, and keep the profit they made on the transaction.

Another way to gauge the sentiment on Coinbase is to look at the percentage of institutions that are invested in the stock. In this case, 59.5% of the shares are held by pension, mutual, and hedge funds, which shows that these institutions probably have strong confidence in the stock.

Institutions have vast resources. If institutions are invested in a particular stock, it shows in most cases that they have performed quality research and concluded that it is a good investment. In some cases, however, increases in institutional ownership could be a sign of a takeover attempt or proxy fight, which can actually injure share prices. Also, institutions are not infallible, and can certainly make miscalculations -- often with spectacular results.

Reviewing the analyst coverage of a stock as well its short and institutional ownership percentages gives a glimpse of what the current market sentiment is on Coinbase. Warren Buffett famously said that markets are voting mechanisms in the short term, but that in the long term, they are weighing mechanisms. This means that long term investors should be aware of a stock's fundamentals before committing.

At a glance, here are some essential statistics you may want to know about COIN:

  • It has a trailing 12 month price to earnings (Eps) of $9.78 per share

  • Coinbase Global has a trailing 12 month Price to Earnings (P/E) ratio of 7.7 while the S&P 500 average is 15.97

  • The company has a Price to Book (P/B) ratio of 2.9 in contrast to the S&P 500's average ratio of 2.95

    • Coinbase is a Technology company, and the sector average P/E and P/B ratios are 20.64 and 5.39 respectively

For a more in depth analysis on COIN, check out our article from 22 July. If you want to stay on top of the latest market movements, take a moment to subscribe to our free newsletter.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.