Coinbase Global (COIN -3.24%) picked an auspicious day to go public earlier this year. The leading cryptocurrency trading exchange's market debut on April 14 coincided with what continues to be the all-time high for Bitcoin (BTC 1.21%).

It wasn't just Bitcoin hitting a high-water mark that day; Coinbase also peaked on its first day of trading. Hitting the market at a reference price of $250, the shares nearly fetched almost $430 before going on to give back all of those upticks in subsequent months. Coinbase is essentially back to where it was when it all started, closing on Tuesday 0.3% below its $250 starting line. Bitcoin has been rallying in recent weeks, but it's still 13% below its springtime peak. 

Why is Coinbase now trading slightly in the red for 2021? What has to happen for it to get back above its debut price? Let's kick the tires to see what went wrong -- and what can still go right for Coinbase in the final few months of the year.

Someone opening up a suit to show a Bitcoin t-shirt underneath.

Image source: Getty Images.

A token of lost love

Coinbase is huge. It has 68 million verified users. There was a whopping $462 billion in crypto trading through its exchange in its latest quarter. Divide that into the $180 billion in assets on its platform and you can see the power of trigger-finger speculators buying in and out of hot and cold crypto denominations. 

Its growth is explosive for a stock that's essentially been a roundtrip to nowhere in its brief tenure as a public company. Revenue soared 11-fold -- up 1,042% -- in its latest quarter. Coinbase is also ridiculously profitable, and its bottom line is growing even faster than the top line with its highly scalable model.

If everything is so rosy, why is Coinbase trading flat in 2021? With Bitcoin starting to pick up steam again, why isn't Coinbase going along for the ride? 

Investors were puzzled in the second quarter when Coinbase stock held up better than the crypto market. They also can't explain why the tables turned in the third quarter, with Coinbase stock sliding 10% as Bitcoin popped 25% higher. 

Well, Coinbase is a bet on crypto trading -- and not necessarily its ascent. Volatility is what ignites trading fees that add up in volume. Coinbase has also had a couple of stumbles between the jaw-dropping financial updates. Reports of Coinbase's iffy customer service -- in the thankfully rare cases where hackers drain user accounts -- aren't helping. The Securities and Exchange Commission blocking a plan for Coinbase to offer a 4% yield on its dollar-pegged stablecoin nixed a plan that could've drawn income investors to the platform's front door.

Coinbase isn't moving on buzzword-heavy news. The stock isn't getting a boost when it introduces trading available for a meme crypto. The announcement this week that it's launching a platform for NFTs also didn't light a fire under the shares. 

The moment of truth for Coinbase will come when it reports third-quarter results next month. We've seen trading volume for crypto slow sequentially, and Coinbase will lack that one-time earnings boost it had as a tailwind in its previous report. These are negative points that will weigh on the actual results, but this also means that expectations are low. Analysts see revenue declining by roughly 25% sequentially, with earnings per share plummeting by more than 75% from the second quarter. With sentiment still lukewarm, even a modest beat can turn things around. Coinbase also has a plan in place to improve its customer support, and it's perpetually rolling out new offerings. 

All bets are off if crypto craters to the point where trading activity dries up, but that doesn't seem likely. Too many major financial tastemakers are legitimizing crypto and embracing Bitcoin. There seems to be more upside than downside here, and Coinbase is likely to move higher in the current quarter than lower.