Coinbase is one of the “bubble stocks,” says founder of Kynikos Associates
Coinbase is the biggest cryptocurrency exchange in the whole of the United States and is known for offering a variety of products to its users. However, despite its huge consumer base, the founder of Kynikos Associates, Jim Chanos, believes that it is not a good investment and called it one of the “bubble stocks.”
Chanos is shorting Coinbase
Chanos is shorting Coinbase, as per his interview with CNBC which means that “he's betting the price of Coinbase stock will fall,” as per Forbes. He also warned investors about Bitcoin, the world’s biggest cryptocurrency.“Coinbase is what we would call one of the bubble stocks,” he said in his CNBC interview. It is important to note that the stock price of the cryptocurrency exchange has mostly co-related to the price action of Bitcoin and as a result, the stock price is half of its all-time high.
"We think that as competition increases in crypto, and this is not a call on crypto or bitcoin prices or anything like that, but we think as competition increases amongst the exchanges, you're going to see fee compression, and as it is Coinbase will probably not be profitable this year with a $40 billion market cap."
Expansion beyond comprehension
Coinbase is expanding far and beyond into the horizon with the dawn of 2022. Recently, Cryptonary reported that Roger Bartlett, a senior executive and managing director at Goldman Sachs, has left the banking firm to join the cryptocurrency exchange. Moreover, the exchange has also planned to hire around 2,000 people this year to create dominance in the Web 3.0 space.Coinbase has also acquired FairX, a CFTC-regulated derivatives exchange. However, despite all this growth and partnerships shown by the firm in the past few months, Chanos made the following statement:
"There are plenty of companies that are in the new economy that have real growth, real cash flows with real earnings, but there's a lot that is just being sold on stories. And we would argue that Coinbase is one that's being sold on a story," Chanos added.
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