Coinbase Fell, Snowflake Rose: Which Will Rise From Here?

When Coinbase (COIN) posted disastrous quarterly earnings and a weak outlook, the stock plunged to below $50. Shares rebounded in the weeks that followed. Markets are starting to decouple the cryptocurrency platform’s stock price from Bitcoin volatility.

Decoupling is a positive development.

Coinbase is not yet investable. Insiders sold shares to lock in their profits. They also rewarded themselves with more share-based compensation in 2022. Investors are taking all the risks for Coinbase’s ambitious global growth plans.

On the software applications segment, Snowflake (SNOW) has even worse prospects than Coinbase. It posted a GAAP EPS loss of 53 cents. It lost money despite growing revenue by 84.5% Y/Y to $422.37 million.

In Q2, Snowflake expects revenue in the range of $435 - $440 million. Again, the up to 73% Y/Y growth will still net an operating loss margin of 2%. For the full-year 2022, Snowflake will post product revenue of up to $1.9 billion.

The euphoria for hyped, overpriced, software and platform stocks is ending. Both stocks could rise briefly to reward speculators. The long-term prospects are too weak to justify current prices.

Consider taking profits in both stocks if they rise from here.