After Coinbase's (COIN) quarterly results, the stock bounced back from sub-$50 to close at $58.24. Short-sellers who were gleefully expecting poor results need to worry. The 20.71% short float might lead to a short squeeze. Coinbase’s stock resiliency may help Bitcoin’s strength.
Coinbase posted revenue falling by 33.4% Y/Y to $772.5 million. It lost 34 cents in GAAP. Those mounting losses and business slowdown undermine the company’s willingness to reward executives with generous stock-based compensation. The market overlooked the weakness by lifting COIN stock by 18% on May 5, 2023.
Short-sellers are overlooking the momentum from retail investors. Inexperienced traders bid APE, AMC Entertainment, and Gamestop (GME) higher to pressure shorts. The crowded 20% short-float against COIN stock could send the stock to at least $70 next.
Coinbase’s rally despite its deteriorating fundamentals might help Bitcoin. People who want an alternative to fiat currency may consider the widely held crypto instead. This might help Coinbase sign more customers on its platform. More importantly, it increases demand for Bitcoin, raising its price.
Bitcoin needs to break out above the $30,000 level to overcome last year’s rout of crypto platform bankruptcies. $31,500 is the next rally point, followed by $35,000.
