Coinbase Global – The Odd Man Out Is An Investor’s Best Friend

And these words which I command you today shall be in your heart. You shall teach them diligently to your children, and shall talk of them when you sit in your house, when you walk by the way, when you lie down, and when you rise up.

Deuteronomy 6:6-7

The Lord requests something that is very difficult to give, all my heart, mind, and soul. The good news is the He has provided me a clear guide through the Bible of how I must seek Him and give Him my best despite my imperfections and inability to perfectly do what He asks. A major goal for me is to study God’s word daily and diligently applying His teachings throughout each day of my life.

A word that comes to mind to describe this commitment is perseverance. It’s a word that many will relate to as to go through difficulty and to achieve goals and objectives, perseverance is required. For investing, perseverance is a great word to relate to the multitude of challenging environments that retail investors face over the course of time. This is especially true for those seeking long-term strategies while focusing on aggressive growth opportunities.

Today, an unmistakable dichotomy exists. Markets are not just willing, but eager to place an extreme premium on artificial intelligence, or AI companies versus companies with Crypto exposure. There are companies with varying degrees of exposure to AI that are trading at highly excessive premiums while Crypto peers exhibiting greater growth and cash flow performance are trading at substantially lower discounted multiples. This dichotomy is masking where some of the strongest investment potential lies and affords a clear misalignment and indication of substantial market inefficiency.

The best illustration of this dichotomy is Coinbase Global, Inc. (COIN) versus Palantir Technologies, Inc. (PLTR).

What’s the debate across these two with respect to revenue performance? PLTR has never witnessed a decline in revenue during the time above, and yet despite COIN’s volatility, COIN’s current revenue has increased by over 1,200 percent versus PLTR’s 386 percent.

Both COIN and PLTR started off with negative operating cash flow performance. And just like revenue results, COIN has displayed more volatility. Since 2020, COIN’s cash flow has grown by 871 percent; since 2021, PLTR’s cash flow has grown by 346 percent.

Today, valuation multiples are quite opposing:

• EV/Sales: COIN 11 times – PLTR 99 times

• OCF/Share: COIN 30 times – PLTR 250 times

There is no denying that this dichotomy clearly illustrates that something is completely off. While AI continues to get all the attention, there’s a chance that it’s going to end up being more additive to existing business models rather than substantially accelerating new revenue streams, especially for Big-Tech. While PLTR may have a highly scalable data platform application, this was the case before AI became the new buzzword for Wallstreet’s control tactics.

For Crypto, the opposite is at play as the utility of Crypto and blockchain has the potential to greatly supplant existing legacy businesses today and has very robust potential over time. The irony is that the AI hype could end up clouding the Crypto opportunity and the discounted stock price of COIN could be one of the best aggressive growth opportunities over the mid-term.

Not too long ago when COIN was transitioning from the Crypto peak in 2021 through the Crypto winter through 2023 that analysts were only expecting COIN to generate around $5 billion in revenue with not much growth over a two-year period. The 2025 former $5 billion estimate has now been advanced to $8.6 billion with an expectation for a drop towards $7.6 billion for 2026. While volatility has been the case the past six years, one cannot deny the increasing volume and utility of Crypto and corresponding growth for COIN that is exponentially outperforming PLTR.

Analysts have been playing catch-up for PLTR as well and my financial model is much more aggressive than most analysts’. Even so, when comparing PLTR to COIN over the mid-term to 2029, my financial models are projecting COIN to continue to witness revenue growth at an exponential rate 2.5 times greater than PLTR regardless of volatility concerns.

Does this mean that COIN should see its OCF/Share multiple expand towards 100 times, or PLTR’s drop towards 100. While I believe that COIN will see and expanding cash flow multiple over time, there is no justification for it to go much higher than around 50 times. This clearly places concern for companies like PLTR that have cash flow multiples in the hundreds, let alone 250 times. A major pullback for PLTR is on the horizon, and COIN’s suppression will inevitably generate higher investment returns. COIN's muted after-hours performance is a clear indication of Wallstreet's appetite for AI, due to the market's greater acceptance of it across sectors and industries.

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