We recently published a list of Jim Cramer’s Top 10 Hottest Stock Picks. In this article, we are going to take a look at where Coinbase Global Inc. (NASDAQ:COIN) stands against Jim Cramer’s other hot stock picks.
In a recent post of Jim Cramer’s Morning Thoughts, he highlighted the impact of recent economic data on market sentiment. The S&P 500 is poised to fall for the fourth day in a row, following a weaker-than-expected August jobs report. The report revealed that the U.S. economy added 142,000 jobs last month, falling short of the Dow Jones estimate of 161,000.
“The S&P 500 is tracking for a fourth straight day of declines after the highly anticipated August jobs report came up short. Bond yields also moved lower on the report. The U.S. economy added 142,000 jobs in August, less than the Dow Jones estimate of 161,000, while the unemployment rate ticked down to 4.2% as expected.” Cramer said.
Despite this shortfall, the unemployment rate dropped to 4.2%, aligning with predictions. Additionally, the job gains for June and July were revised downwards. As a result, traders are now split between anticipating a standard 25 basis point interest rate cut and a more substantial 50 basis point reduction at the Federal Reserve’s upcoming meeting on September 18.
“Job gains in the June and July reports were also revised down Friday. Traders were split roughly evenly between a traditional 25 basis point interest rate cut and a larger 50 basis point reduction at the Federal Reserve’s policy meeting on Sept. 18.”
“We Got What We Wanted, But the Market Crashed”
In a recent episode of Mad Money, Jim Cramer discussed how September 6 turned out to be a disappointing trading day. Despite hopes from bullish investors for a weak non-farm payrolls report that would encourage the Federal Reserve to cut rates, the actual report met these expectations.
“What an ugly day. Just hideous. We came into today knowing we’d have a critical non-farm payrolls report. If you were a bull, you wanted to see weaker-than-expected hiring with wages pretty much in line, because that’s what the Fed needs to see before it can start cutting rates. Voila, we got exactly what we wished for. Maybe we should have been careful, though, because as soon as we got what we wanted, the bulls vanished and the sellers came out of the woodwork, crushing practically everything.” Said Cramer.
Jim Cramer pointed out that September is historically a weak month for the market due to significant profit-taking. Although it might seem circular to link September’s weakness to profit-taking, it’s more reasonable than attributing it solely to fears of a severe economic slowdown. Cramer emphasized that, despite the market’s dips, big tech companies, especially those involved in key trends like data centers and accelerated computing—should be considered as buying opportunities during these times.
“This market has a September problem. Come September, we’re always hit with a tremendous amount of profit-taking, which is why it’s the weakest month of the year. I know that’s somewhat circular reasoning—we sell because we’ve always sold—but it makes more sense than saying people sold tech because they fear a hard landing. Tech, especially big tech, is something you buy, not sell, into weakness if you’re worried about a more severe slowdown.
Why? Well, because big tech is all about powerful secular themes that can keep going even during a recession—and we’re not getting one. I’m talking about the data center, accelerated computing—they’re not going anywhere. Nevertheless, when anything jars the big tech themes of the moment, the market’s reaction is swift, harsh, and horrible.”
Jim Cramer Urges Investors: “Do Not Abandon Ship”
Jim Cramer discussed the upcoming release of the Consumer Price Index (CPI) on Wednesday, which will offer new insights into inflation. He noted that if inflation stays steady or falls, the Federal Reserve will have more room to cut interest rates, which could help prevent a recession and address concerns from many sellers. Cramer encouraged investors to remain confident and avoid abandoning their positions due to these uncertainties.
“Wednesday, we get another read on inflation—this time from the Consumer Price Index. What can I say? As long as inflation stays the same or goes lower, the Fed has plenty of leeway to cut interest rates and prevent a recession—the thing so many sellers are worried about. That’s why I keep telling you, please do not give up the ship here.”
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A shot of someone securely accepting crypto assets as payment, showcasing the company’s payment solutions.
Coinbase Global Inc. (NASDAQ:COIN)
Number of Hedge Fund Holders: 45
Barclays upgraded Coinbase Global Inc. (NASDAQ:COIN) from a “sell” to a “hold” rating, stating that the company’s business model has become more mature. Jim Cramer noted the shift, reflecting Barclays’ recognition of Coinbase Global Inc. (NASDAQ:COIN)’s growth and development in the crypto space.
“Barclays goes to hold from selling on crypto stock Coinbase saying their business models have matured.”
Coinbase Global Inc. (NASDAQ:COIN) presents a strong investment opportunity for 2024 due to its resilience in tough market conditions, diversified revenue streams, and positive regulatory outlook. Despite a drop in global crypto trading volumes, Coinbase exceeded revenue and adjusted earnings expectations in Q2 2024, showing strong operational performance. Coinbase Global Inc. (NASDAQ:COIN)’s shift toward subscription and service-based revenue, which hit record highs, reduces its dependence on transaction fees and enhances revenue stability.
Additionally, growing optimism about potential regulatory clarity in the U.S. is expected to attract more institutional investors, boosting Coinbase Global Inc. (NASDAQ:COIN)’s long-term growth prospects. Overall, Coinbase Global Inc. (NASDAQ:COIN)’s ability to adapt, diversify revenue, and improve the regulatory environment creates a promising outlook for continued success in the evolving cryptocurrency market.
Patient Capital Opportunity Equity Strategy stated the following regarding Coinbase Global, Inc. (NASDAQ:COIN) in its Q2 2024 investor letter:
“Coinbase Global, Inc. (NASDAQ:COIN) was a top detractor following cryptocurrencies lower throughout the quarter. While cryptocurrencies are going through a digestion period following the all-time high reached by Bitcoin in March, we believe it is still the early innings for institutional adoption and exposure to cryptocurrencies. We believe Coinbase continues to solidify its position as the platform of choice for the crypto-ecosystem and will benefit from this increasing demand over time.”
Overall COIN ranks 8th on our list of Jim Cramer’s hottest stock picks. While we acknowledge the potential of COIN as an investment, our conviction lies in the belief that under the radar AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than COIN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.