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Forex in this article
• Analysts from BTIG and D.A. Davidson awarded a buy rating and a high price target for Coinbase shares
• Coinbase as a pioneer with strong growth opportunities
• The market share and balance sheet of the US crypto exchange are convincing
The eagerly anticipated IPO of the largest US crypto trading platform Coinbase in mid-April turned into a real success. The stock traded well above its reference price of $ 250, climbed as high as $ 429.54 at times, and eventually ended its first day of trading at $ 328.28. The paper is currently trading around the $ 290 mark on the NASDAQ, around 16 percent above its reference price (as of April 23). But there is much more to the Coinbase share, believe analysts Mark Palmer and Andrew Harte of financial services provider BTIG. After the IPO, they included the share in their valuation and, based on the current level, attested to an upside potential of around 70 percent. Because the two experts have set the target price for Coinbase at 500 US dollars – and assigned a buy rating accordingly.
Analysts see immense growth opportunities for Coinbase
In their study, BTIG analysts Mark Palmer and Andrew Harte certify that Coinbase is a pioneer and therefore place the crypto exchange in the same league as Tesla or Zoom. “We believe that COIN should be seen as the leader in a category that is characterized by rapid and apparently sustainable growth, which is driven by significant changes in consumer behavior and their adoption of new technologies,” the analysts said, according to “MarketWatch”. Accordingly, this status must also be reflected in the rating multiplier, “as is the case with other category leaders with unlimited growth opportunities such as Zoom, Tesla and Snowflake”.
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Gil Luria from D.A. Davidson. He also compared the Coinbase share to “Fortune” with high-growth companies like Zoom, which also have very high valuations. “You have the same effect; you are the leader in a very fast growing market that really has open-ended growth opportunities,” said Luria. For the area of crypto assets, he expects that it will develop into one of the fastest growing categories in the technology sector over time. According to the analyst, Coinbase is therefore “a great way to invest”. This is also reflected in its target price of $ 650, which is even slightly higher than the BTIG experts.
Coinbase as the “gold standard among crypto exchanges”
The analysts justify the bullish assessment of Coinbase primarily with the very good market position of the US crypto exchange in their segment – comparable to the position of Tesla or Zoom in their respective industries. While Gil Luria from D.A. Davidson simply stated to “Fortune” that in his eyes there was no real competitor for Coinbase with the crypto exchanges, the BTIG analysts described Coinbase as the “gold standard among the exchanges for digital assets” and above all praised the rigorous compliance with regulatory requirements, what make the crypto exchange a kind of “safe haven” among such platforms, as well as the company’s market share. According to the company, there were around 223 billion US dollars in crypto assets on the Coinbase platform at the end of the first quarter of 2021. That corresponds to around 11.3 percent of the world’s crypto assets. “This market share is at the center of our bull thesis for COIN, the upside potential of the company could be immense,” said BTIG analyst Palmer, according to “Benzinga”. It is assumed that the market capitalization of the cryptocurrencies continues to increase overall. However, since more and more companies and institutional investors are relying on Bitcoin and Co., this can probably be assumed.
According to the BTIG experts, the generally increasing acceptance of cryptocurrencies will have a positive effect on Coinbase. The crypto exchange is in a good position to be a “first beneficiary of the increasing acceptance of Bitcoin and other digital assets,” the analysts believe, according to “MarketWatch” – and also name several ways in which Coinbase could use its pioneering advantage. For example, the crypto exchange can make use of its increasingly robust platform for institutional investors, as their increasing acceptance of cryptos is likely to be one of the most important growth drivers in the future. A necessary diversification of the sources of income is also mentioned. Because so far Coinbase has generated the majority of its sales through transaction fees. Last year, according to BTIG, they were responsible for around 96 percent of net sales. But this also brings with it a great danger: Because a decline in the demand for digital currencies or a sharp drop in prices for Bitcoin and Co. would have a strong negative effect on Coinbase’s sales. Diversifying sources of revenue could reduce this risk.
Coinbase with a strong balance sheet
According to the BTIG analysts, the balance sheets to date also underpin the bullish outlook for Coinbase. “We believe they have shown the platform’s capabilities to generate explosive growth,” said BTIG experts, according to Benzinga, in view of the latest results. The crypto trading platform made it into the black as early as 2020 and the values forecast by the US company for the first quarter of 2021 are more than impressive. For the first quarter of the year, Coinbase expects a net profit of 730 million US dollars to 800 million US dollars and a turnover of 1.8 billion US dollars. That would be more than in all of 2020.
Finanzen.net editorial team
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