wtf cathie wood | critical mistake.

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

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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