I just lost a ton of money

I just lost a ton of money investing in stocks

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I lost a ton of money investing in the stock market, this was one of my biggest investing mistakes. Hopefully by the end of this video you can learn how to avoid my same mistake. I bought the Coinbase stock the day of the DPO (direct public offering) and I lost a ton of money! My total cost basis now sits at $376 per share, and I own roughly 220 shares. I spent a grand total of $82,754 and I’m now down $8,503 – here’s what happened.

I’ve been excited about Coinbase ever since I started using in 2014 and I couldn’t find a way to invest in Coinbase so instead I kept buying Bitcoin. But I already have a lot of Bitcoin and I wanted to buy this stock because it’s the best product we have for buying a broad market ETF – something like the S&P500 (VOO) but for the crypto markets – so instead of buying all the coins individually and holding the crypto assets which is a huge risk security and price wise, instead I figured it’s better to buy the stock that sells those assets because regardless of which crypto wins whether it’s Bitcoin or Ethereum or Dogecoin – guess where people are going to go if they want to buy? ROBINHOOD – just kidding – not your keys not your crypto – but they’ll either go to Gemini or Coinbase and since Gemini is not public yet Coinbase was the perfect opportunity to buy.

Mistake 1: Being too excited for a stock that was very hyped.

Coinbase has 1,700 employees, over 56 million users, a 1.8 billion revenue in Q1 or a net income of about $750 million dollars. Sure it’s trading at several hundred times P/E ratio. But there are stocks in the market that trade at a premium that aren’t even profitable. The best example of this is Tesla – Tesla was not profitable for 8 years after it IPO’ed and people were still paying a premium for that company because of what they believed it would do in the future. For Coinbase, trying to value this company and compare it to something like a traditional bank or exchange is missing the point. Even if transaction revenues from the fees get compressed to $0 in the next 5 years, it won’t matter much because by then their sources of revenue from Coinbase Commerce which will allow businesses to accept cryptocurrency, they’ll have credit card services, banking services, loan services, staking services which is where we’ll be able to take our tokens and stake them in liquidity pools, they’ll incorporate custody NFT integration with maybe even an NFT marketplace, all of that will represent a much larger pie of revenue than just transactional revenue alone.

Worst case scenario: $600 by 2023 / 2024 if assuming that it trades at a 20 times forward PE just based on a modest 50% growth rate which I think is fair and in line to other comparable fintech growth companies like a Square or Shopify.

THE REAL RISK: Coinbase is heavily tied to the price of Ether and Bitcoin – 41% of it’s transactional volume comes from Bitcoin, and 15% from Ethereum which means 56% of it’s trading volume comes from just those two coins. But here’s what happens – if the price of Ether and Bitcoin tanks? Coinbase’s transactional fee revenue will fall substantially.

Mistake 2: Letting my emotion get the better of me. I knew better than to buy on day 1 into IPOs or DPOs. I always think wait – be patient. You don’t have to invest in every single winning stock. It’s the same reason you don’t lose sleep when you realize there’s people making money in the casino, sure – some people are but I don’t feel FOMO – there’s plenty of other ways to make money in this world and I don’t need to capitalize on all 10 out of 10 of them to feel good and make money. Don’t give in to your FOMO or greed.

Coinbase is still an incredible company but the buying opportunity will be later this year or early next year.

*None of this is meant to be construed as investment advice, it’s for entertainment purposes only. Links above include affiliate commission or referrals. I’m part of an affiliate network and I receive compensation from partnering websites. The video is accurate as of the posting date but may not be accurate in the future.

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