Oh, we gotta talk about Kathy Wood And what the heck is she doing? We're gonna talk about exactly that. I Do want to announce a new challenge I have coming out starting next week? a Monday That's right after Thanksgiving folks. Guess what? Five Million Dollar Trading Challenge And that and every single trade that I conduct with daily trading will be screenshotted and shared with everyone in the Stocks and Psychology of Money Group. So if you want to be part of the Five Million Dollar Trading Challenge, check out the Stocks and Psychology of Money Group. You got that black Friday coupon code 60 off. We're gonna do a trading challenge between now and probably the next six months, which is roughly when I Think it's time to start trading real estate, but we'll see. We might let that keep going. Maybe we'll even do both at the same time Anyway, check that out via the link down below. Make sure you take advantage of this 60 coupon. But now, what is Kathy up to? Because Kathy has scooped up 1.3 million shares of Coinbase Coinbase. 1.3 million shares worth about 56 million dollars. She started buying this right around the time when the FTX collapse began and I Conveniently yeah, and that's right around here. These eight nine percent drops. Look at that 8.92 drop. 11.32 Uh, three, nine percent drop here. Then we got the decently positive CPI report here on the 10th. Coinbase ended up rocketing up about 10. It ended up closing that day at 51. Kathy's bye bye bye bye bye bye on on Coinbase now it's down another 20. The thing's sitting at 40 bucks right now. Forty dollars and 81 cents is what it's currently trading for for some reason. Kathy Wood keeps buying this. She's now up to 19. Uh, we're up 19. that is on her allocation for Coinbase on her. Arc K Fund she owns about 4.7 of all Coinbase outstanding. It's now the 13th largest position in Arc K and I hate to say it I don't know about this I don't know about this. Okay, the the the what I see in this report just isn't that juicy. Now we're gonna look at that. but I Want to say Coinbase In Fairness did just put out a statement. Then they have custody of some of the Gbtc assets. That has led to a lot of enthusiasm for Coinbase. though obviously not enough because the darn thing's down like literally 10 today. But let's look at the last quarter's earnings report and let's just look at some of the highlights we got here because I'm really trying to look at what Kathy Wood is trying to do I Can't help but think she's committed to blockchain and this is just all right. Even though it's going down more the merrier, let's just keep buying it and that's fine. when it's something where you're like the fundamentals are good, you know something else is causing this, right? But when you look at the fundamentals for Coinbase: I I Don't know I wouldn't call him good. Here's why. All right, hello shareholders! Q3 was a mixed quarter for Coinbase transaction Revenue was significantly impacted by stronger macroeconomic and crypto Market headwinds as well as trading volumes moving offshore. None of that is good when the macro economy does worse. People have less money to deposit into Coinbase and they trade less. So not only do they trade with less and then whatever they had, The value of that goes down when when these currencies go down, but then they trade less to begin with because people don't like trading crypto when the crypto markets are collapsing, but it also leads to softening secondary levels of Revenue. Now, fortunately, in this last report, Coinbase actually had some growth in subscription and services Revenue But that was always built into the bag because remember when this company IPO the idea and I set it in my video over a year ago, we knew that transaction Revenue would go down because of competition in the space. But what we expected was that services like lending and and staking whatever all of the other services would eventually pick up. So we expected a an inverted you know, sort of uh, earnings growth. uh Peak Here where basically you have an earnings Decline and then hopefully an explosion where you basically go from level one Revenue to level 2. Revenue The problem is the entire crypto Market started collapsing. So when the entire crypto Market started collapsing, you ended up having L1 go down. But unfortunately L1 ended up going down a lot more than expected. and the gain in L2 has been like that. so you know it just hasn't been the prettiest picture. And therefore when you zoom out on Coinbase, you see oh yeah, here's a company that was once a 368 dollar stock bouncing around over here at the 225 to 230 level for quite a while and is now trading for forty dollars. So then of course they talk about transitioning or people and Retail customers Behavior transitioning from Trading crypto to just hodling crypto. And maybe people are uncertain about the regulatory framework because as prices are going down, we're also seeing monthly volume decline over 50 percent in nine months. which is terrible by the way, because that's how they make their fees right. But it's not not just that. Look at this: If you just type in Coinbase transfer into Google search Trends You're just now starting to see the potential pickup that could worsen. It's still very early. It's nowhere near the levels that we saw during the crypto boom over here 20, 20, 21.. if you just sort of zoom into 2022, you can see we're at lower levels of people wanting to transfer than the pain we saw in the summer, which is good. but you are seeing a pickup because people realize not your keys, not your crypto. They're wanting to get off exchanges now. Coinbase does give you your own wallets, but people might not recognize that and might think I need to get off exchange. And so there could actually be a flood of people wanting to leave a service like Coinbase if they're concerned after the whole FTX Fiasco But beside those potential headwinds that could come for Q4 Because certainly crypto prices aren't doing too well after all. not only are are we seeing uh Bitcoin prices stumbling, but Ethereum prices are faltering under. well, probably the FTX hacker dumping Ethereum sitting at just under 1100 at the time of this recording and BTC folks sitting at Fifteen Seven Eighty nine. Yikes. Yikes. Painful. Anyway, so we've got clear pain in the market, so we're not really that enthusiastic about Q4 for Coinbase, and you can't really blame me for saying that because not only is Genesis about to file for bankruptcy if they can't raise enough Capital to bail out their lending division, but look at what Coinbase said in their earnings call their forecast ending October is based on the following quote: This is assuming our market cap doesn't go down and deteriorate meaningfully below October and we don't see any changes in consumer Behavior All of this was before FTX blew up. But let's try to understand some of the numbers. so monthly transacting users down to eight and a half million is actually not too bad. You know, in Q3 of last year we were sitting at 7.3 so when you look year over year, you're at growth. But we're certainly down from Q4. You know that November Boom That we had, we're way down from Q4. But the other thing to consider is oh man, look at that. Revenue that Revenue year over year is down more than half 578 million dollars of Revenue leading to a loss in Q2 of a billion dollars and a loss of about 545 million in Q3. So losing money hand over fist user trajectories are going down. Not only are user trajectories going down, but Coinbase is telling you that people are transacting less Now you have people fearful about lending Services because of the FTX disaster Gemini earn freezing withdrawals on urn products. That's likely going to lead to even fewer L2 revenues, right? Secondary Services of Revenue But let's go over here and let's look at some of these things. Look at this. They also tell us that Coinbase 1 and Coinbase Cloud are the two sectors that are actually propping up growth they saw Revenue move up to 31 million dollars 29. Growth sounds really good, right? But wait a minute. 31 million dollars out of 576 million dollars of net revenue? Wait a second here. 31 divided by 576. That means those L2 Services only represent 5.3 percent of all of their revenue. That means still L1 represents like 95 of all the revenue. And they're telling you from January to September that's down 50 percent and they're losing money hand over fist. But don't worry. L2 these secondary Services of Revenue these will get a lot better, right? Because after all, what is Coinbase One let you do? Oh, Coinbase One lets you trade with zero fees. Wait a minute. But people are trading less and zero fees. Actually just self-cannibalizes the revenues that you're trying to make. so you're cannibalizing your Traders Revenue which is already plummeting in exchange for something that only makes up five percent of your company's Revenue So don't mind the fact that Coinbase One or Coinbase Cloud which the cloud version is sort of their API blockchain builder for other people to be able to use their companies to be able to use. Don't mind the fact that both of those could suffer substantially after all this FTX disaster and drama. Don't worry folks, Coinbase is very excited to announce that just over one percent of their revenue is now coming from Learning Rewards. So that way when you watch videos and refer people to Coinbase, Coinbase gets a little bit of money. Oh okay. all right. Okay, fine, fine. let's just keep looking here. The good news There is good news. The company does have money. They have corporate cash I Like that. I Like corporate cash sitting around 2.5 million? a billion dollars? sorry and 2.8 over here in Money Market Okay, great, that's nice, but how much of this, my friends, are? They actually burning well when we go to the cash flow statement and we jump over here and look at net cash used by operating activities. in the last nine months, they've burned nearly five billion dollars. But wait a minute. Wait a minute. How much cash did they have? Oh right, they had roughly five billion dollars in cash, which is roughly the equivalent of how much they literally burned wasting money over the last five months. But it's okay. it gets better their their revenues. Okay, their revenues for the three months ended September 2022 compared to 21. fell by 53 percent. while at the same time, their technology costs went up by 56 percent. so understand that for a moment. Okay, Revenue Down 53 percent expenses for running Coinbase.com up 56 percent. It's not good, it's not good. Okay, okay, uh. what do we have here? G and a G a 339 divided by 242 40 increase in their staff and then they cut their marketing budget by like 25. On top of that, get For some reason, they're still bloating the corporate office. and the bigger question is Kathy why are you buying this? I Don't know I Want to know? I I Think there you know if if the FTX stuff could bottom out, if all the crypto shoes could drop fine Kathy did also buy Gbtc. Now Gbtc doesn't want to verify where all of their reserves are. just a little sus just a little you know. I'm not gonna go and say it's all sus, it's just a little sauce. It's definitely sustum. But uh, you know, if you believe Bitcoin is going to last for the long term, this is a juicy discount at Gbtc. I Made a video on that this morning. but straight up buying coinbase right now I don't know I don't know. Maybe maybe I'm gonna miss out on this trade. but if you want to be part of my 5 million dollar trading challenge stocks and Sykes folk, you'll get every single Buy sell alert on that five million dollar trading portfolio. and that's not going to be a long-term investing portion that's just gonna be trading. So that way my long-term Investments are going to sit put. if I don't trade on those. Don't worry if I do trade on those, you'll get alerts on those too. But for stocks and psych, we are now adding a whole new 5 million dollar trading portfolio. We're going to do a lot of fun. Uh, selling of options, buying of options. We're really going to play the news cycle so it's going to be fun anyway. Thanks so much for watching. We'll see in the next one. Goodbye.

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