Shopify CEO Bought More Coinbase Stock
Shares of Coinbase Global (NASDAQ: COIN) stock are in focus again following yet another insider purchase by Director and Shopify (NYSE: SHOP) CEO Tobi Lutke. Lutke became a director of Coinbase global in February, joining the ranks of co-founder Fred Ehrsam and Andreessen Horowitz CEO Marc Andreessen.
Shopify (SHOP) CEO Tobi Lutke continued to buy Coinbase Global (COIN) stock this month. Lutke, who is also a director of Cryptocurrency Exchange platform Coinbase (ticker: COIN), is not directly putting in the trades. Instead, he set up an automated rule enabled trading plans in late May 2022. The plans are meant to remove any likely bias an insider may have from knowledge of non-public information. After an insider sets parameters such as price and timing, the trading plan automatically executes transactions.
From 23rd August through 13th September, Lutke’s plan paid $1.5 million in four different transactions for a total of 21,130 Coinbase global shares, at an average price of $68.85 each, according to forms he filed with the U.S. Securities and Exchange Commission (SEC). The stock purchases were made through an investment vehicle that now owns 54,583 Coinbase global shares. Lutke currently owns 522 more Coinbase shares in a personal account.
Shopify (SHOP) did not respond to a request to make Lutke available for comment. Lutke founded the online-shopping platform. Before his latest stock purchases, Lutke bought $746,436 of Coinbase global stock in two transactions earlier in August.
Share price of Coinbase global stock have declined by more than 70% year-to-date (YTD) in the midst of a crypto winter. Meanwhile, both Bitcoin (BTC-USD) and Ethereum (ETH-USD) have fallen by more than 50% YTD. With a decline in Cryptocurrency prices comes a decline in digital currency trading volumes, which has caused Coinbase global revenue to plummet. In June, the exchange platform announced that it would lay off 1,100 employees, or about 18% of its total workforce. CEO Brian Armstrong cited falling cryptocurrency prices and over-hiring as the reasons for the layoffs.
This past week, J.P. Morgan analyst Kenneth B. Worthington raised his price objective on Coinbase global stock to $78 from $64. The idea behind this was believed that company has “substantial revenue opportunity that originates from higher interest rates,” the analyst wrote. Worthington kept a Neutral rating.
Also Read: How Coinbase Exchange Protects Users From Risky Assets
The Shopify CEO is purchases are highly interesting, as Brian Armstrong has mentioned that Coinbase Exchange is in the process of shifting itself toward a subscription-based model, much like Shopify. Trading fees bring in plenty of revenue during bull markets, but even further decline in the event of bear markets. An introduction of a subscription-based model could insulate revenue during long periods of declines. Armstrong further explained that
In 2020, subscriptions and services accounted for Coinbase Exchange is 4% of revenue. Now, that figure has risen to 18% of its total revenue. Subscriptions that Coinbase Exchange currently offers include Coinbase One, Coinbase Cloud and USDC (USDC-USD) custody services.
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