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$10,000 Invested in This Growth Stock Could Make You a Fortune Over the Next 10 Years

,000 Invested in This Growth Stock Could Make You a Fortune Over the Next 10 Years


If you had asked me a year ago about Coinbase Global (NASDAQ:COIN) being on the list of growth stocks that could potentially make you a fortune, I probably would have dismissed the idea.

However, recent developments have changed my perspective. Despite my initial reservations, it became clear that Coinbase was agile and made things better. So let’s explore the company’s possibilities as it pushes the crypto industry forward.

,000 Invested in This Growth Stock Could Make You a Fortune Over the Next 10 Years

Image source: Getty Images.

A revamped revenue model takes hold

First on my list of reasons why I was unenthusiastic about Coinbase’s potential was the company’s revenue model. At the time, it relied heavily on a single source of revenue: transaction fees. So when the crypto winter set in last year, the lack of diversification became a liability, forcing the company to post a net loss of $1 billion in the second quarter of 2022.

Crypto is well known for its volatility. So as long as Coinbase remained unable to generate revenue during an economic downturn, its concentrated revenue stream presented too much risk that would outweigh its potential reward.

But since then, a lot has changed. In just one year, the company has undergone a remarkable transformation and reduced its reliance on transaction fees. With a diverse revenue model that has generated revenue in a brutal crypto bear market, Coinbase is now generating revenue through its innovative subscription and service products, employing an international expansion strategy, and even launching its own blockchain , Base.

And cost cuts have left spending at its lowest level in more than a year. Add it all up, and Coinbase is just $2 million away from turning a profit based on the latest quarterly earnings report.

With the recent resurgence of the crypto market making it seem like the crypto winter has eased, it’s hard to imagine that Coinbase won’t close this gap and return to profitability by the next quarter.

Potential victory in the courtroom

The second reason for my hesitation about Coinbase’s long-term potential was the numerous legal battles facing the broader crypto industry. As the cryptocurrency market has evolved, agencies like Securities and Exchange Commission (SEC) have aggressively launched legal battles to assert their authority over digital assets.

Culminating with a subpoena issued to Coinbase in June citing a 1946 court ruling known as the Howey Test, the SEC lawsuit alleges that Coinbase sold unregistered securities. If this were the case, it would seriously threaten Coinbase’s core functionality as a crypto exchange and jeopardize any growth prospects.

The initial reaction in the crypto industry was that this could be the nail in the coffin for Coinbase. But sentiment changed over the course of the year, as several legal and legislative developments began to favor the crypto industry.

The most remarkable is the Ripple case in which a judge found that sale of the token to individual investors did not meet the criteria for a sale of securities. The SEC, in a complaint against Coinbase, accused the crypto of engaging in improper sales of unregistered securities.

Adding to this change in sentiment are efforts by Congress to introduce favorable crypto legislation, and Bitcoin even becoming a topic of discussion during recent presidential campaign debates.

Recognition of cryptocurrencies as an asset class separate from any specific governing body appears to be gaining momentum. Although the legal tussle between the SEC and Coinbase will continue through 2024, don’t be surprised if the company wins a historic victory.

Opportunity at your fingertips

There are few better options than Coinbase for investors looking for genuine long-term growth opportunities. Over the past five years, the cryptocurrency market has experienced a compound annual growth rate (CAGR) of over 60%, and Coinbase, with recent developments and improvements to its business model, is in a prime position to benefit from this growth.

For fun, let’s speculate: If Coinbase were to ride the waves of growth sweeping through crypto, a 60% CAGR would mean your $10,000 would be worth over $1.2 million in 10 years. It may be impossible to imagine such phenomenal growth, but early investors in Amazon, Appleand other tech giants probably couldn’t have imagined the kind of progress that has happened since.

Coinbase stock is surging in 2023, and it’s increasingly difficult to imagine a scenario in which it doesn’t one day reach new highs. As the cryptocurrency market continues to mature and Coinbase cements its leadership role in this booming sector, investors could be wrong to overlook this opportunity to grab shares while they are trading 45% below their highest historic high.

Should you invest $1,000 in Coinbase Global right now?

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. RJ Fulton has positions in Bitcoin and Coinbase Global. The Motley Fool holds positions and recommends Amazon, Apple, Bitcoin, Coinbase Global and XRP. The Mad Motley has a disclosure policy.

$10,000 invested in this growth stock could make you a fortune over the next 10 years was originally published by The Motley Fool



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