JMP Securities analyst Devin Ryan has a price target of $394 on Coinbase Global
$Coinbase (COIN.US)$ Coinbase is the largest U.S. cryptocurrency exchange. Its platform offers a range of services to retail traders and institutional investors, helping them securely buy, sell, spend, store, and stake crypto assets. The company has achieved significant scale as it currently holds a market-leading 11.5% of all crypto assets on its platform. That creates a deep pool of liquidity that Coinbase can use to fund growth initiatives like its soon-to-launch non-fungible token (NFT) marketplace.
More broadly, the Coinbase brand inspires trust, and for many investors, it has become synonymous with cryptocurrency. That has led to strong financial results. In 2021, Coinbase saw its number of monthly transacting users grow fourfold to 11.4 million, and trading volume rose more than eightfold to $1.7 trillion. In turn, revenue skyrocketed 514% to $7.8 billion, and GAAP earnings grew more than tenfold to $14.50 per diluted share.
Looking ahead, Coinbase is well positioned to maintain that momentum. Cryptocurrencies are nothing if not volatile, and the company benefits from that volatility. Most of its revenue is generated through transaction fees. In other words, the more people trade, the more money Coinbase makes. And the crypto market has crashed twice in the past 12 months, meaning a lot of cryptocurrency was being bought and sold.
In addition, Coinbase CEO Brian Armstrong believes the coming NFT marketplace could be bigger than its current cryptocurrency business. From that perspective, the analyst's price target of $394 seems entirely plausible. That being said, even if Coinbase stock continues to underperform in the short term, it still looks like a smart choice for patient investors, especially if you believe in the future of the crypto economy.
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