Should Crypto Bulls Avoid Coinbase Stock? Why This Investor Says 'Just Buy Bitcoin'

Should Crypto Bulls Avoid Coinbase Stock? Why This Investor Says 'Just Buy Bitcoin'

Coinbase Global Inc COIN shares jumped more than 30% over the last week after the company announced a partnership with BlackRock Inc BLK.

As the crypto firm prepares to report earnings after the bell, one investor is arguing that Bitcoin BTC/USD is the better bet. 

"If you want to be bullish on crypto and express a view on crypto, just buy Bitcoin," Ritholtz Wealth Management CEO Josh Brown said Tuesday on CNBC's "Fast Money Halftime Report."

What To Know: Brown said he bought Coinbase stock for a trade toward the end of last year and exited his position in early January after finding better opportunities in the market. At the time, he noted that he might reenter the name at some point "in the future," but that doesn't seem likely after he highlighted the downside risk in the stock versus the world's largest cryptocurrency. 

"Go look at a six month chart of Coinbase and Bitcoin and then ask yourself why would you buy Coinbase," Brown said. 

Check This Out: If You Invested $1000 In Bitcoin Instead Of The Coinbase IPO, Here's How Much You'd Have

Coinbase has actually been more volatile than Bitcoin itself, he said. Furthermore, Coinbase exposes crypto investors to potential execution failures on the part of management. The company also faces regulatory risks, he added. 

"Whatever margins they were getting for trading Bitcoin two years ago will be lower next year, the year after that, the year after that. Equity trading is now a free business on Wall Street, so those margins aren't going to come back," Brown said.

"If you know all of these things and you're still bullish on cryptocurrency or Bitcoin, just buy cryptocurrency, just buy Bitcoin."

Coinbase Q2 Preview: Coinbase is set to report second-quarter financial results after the market close. The company is expected to report a net loss of $2.68 per share on quarterly revenue of $830.52 million, according to Benzinga Pro.

Market Strategist Louis Navellier told Benzinga the analyst community is forecasting a 53.2% annual sales decline and a 141.7% earnings decline based on a loss of $2.68 per share. 

"Even if COIN beats, the company is a mess," Navellier said.

COIN Price Action: Coinbase is down about 65% year-to-date, while Bitcoin has fallen close to 50% since the start of the year.

Coinbase shares were down 9.71% at $88.50 at the time of writing. 

Photo: courtesy of Coinbase.

Posted In: CNBCJosh BrownCryptocurrencyEarningsNewsPreviewsMarketsMoversMediaTrading Ideas

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