Shares of cryptocurrency trading platform Coinbase Global (COIN 3.28%) slid on Thursday after a report surfaced saying the company was in talks to buy an international rival for a whopping $3.2 billion. There's already a lot of uncertainty in the cryptocurrency space, making investors reluctant to purchase Coinbase stock. But now that it's looking to making high-dollar splashes in international markets, perhaps investors are even more inclined to sit on the sidelines. As of 12:40 p.m. ET, Coinbase stock was down almost 7%.
Citing Mergermarket, multiple outlets are reporting that Coinbase is looking to buy BtcTurk for $3.2 billion. BtcTurk operates in Turkey and claims to be the fourth cryptocurrency-trading platform ever created. Beyond its longevity in the business, BtcTurk could be attractive to Coinbase because cryptocurrency adoption in Turkey is high. In fact, according to Statista, Turkish citizens have adopted digital assets at the fifth-highest rate of any country in the world.
Today's news regarding BtcTurk comes a month after reports surfaced that Coinbase was also trying to acquire Brazil's 2TM. While we don't know the price tag, it would likely be for more than $2.1 billion, considering that was its valuation at its latest private funding round in November.
Coinbase ended 2021 well capitalized with almost $4 billion in net cash. But investors might be getting nervous as the company spends that money to grow its market share internationally, placing downward pressure on shares today.
While the cryptocurrency market is an unpredictable space, one thing for sure is that investors aren't expecting much growth from Coinbase's business, given its cheap valuation. Right now it trades at less than 10 times its trailing earnings, a 50% discount to the current price-to-earnings ratio of 20 for the S&P 500, according to Yardeni Research. If Coinbase can surprise and find growth in international markets and other ventures like its newly launched non-fungible token trading (NFT) platform in coming years, this stock could look like a steal in hindsight.