How Coinbase Short Sellers Can Learn From Tesla

Kynikos Associates founder Jim Chanos announced a new short position in Coinbase Global Inc COIN after the market closed Friday. The famed short seller cited valuation concerns and warned that the cryptocurrency exchange would fail to reach profitability in 2022. 

Requisite Capital Management’s Bryn Talkington poked holes in Chanos’ short thesis Monday on CNBC’s “Fast Money Halftime Report.”

Chanos expects fees to come down as competition expands, Talkington explained. He believes Coinbase is benefitting from being one of the only publicly-listed crypto exchanges.

Related Link: Famed Short Seller Jim Chanos Targets Coinbase

“I don’t think that’s a secret and I think you would need more to short the stock,” Talkington said, noting that she thinks Chanos is missing the bigger picture.

Talkington’s Take: Talkington noted that Chanos compared Coinbase to Charles Schwab Corp SCHW

“Buying Coinbase today is like buying Schwab 30 years ago, when Charles Schwab just really disrupted the business,” Talkington emphasized. 

Comparing Coinbase to Tesla Inc TSLA five years ago is a better way to look at it, she said: “If you shorted Tesla back then, that wasn’t a great trade and I don’t think this will be a great trade either.”

The investors who thought Tesla should be valued like Ford Motor Co F or General Motors Co GM got it wrong, she said.

“I think Coinbase is similar because it’s not just going to be a trading and custodial platform,” Talkington said. If Coinbase were simply a trading platform, Chanos would have a much better case, she acknowledged.

Talkington highlighted Coinbase’s upcoming NFT marketplace and investment in OpenSea, among other opportunities the company is exploring.

“There are so many different verticals that are happening that I think shorting that today is just short-sided,” she said.

COIN Price Action: Coinbase has traded between $150.12 and $429.54 over a 52-week period.

The stock was down 5.96% at $174.85 at time of publication.

Photo: courtesy of Coinbase.

Leave a Reply

Your email address will not be published. Required fields are marked *