Shares of cryptocurrency exchange Coinbase Global staggered Thursday, but at least one bullish call from Wall Street encouraged them.
Analysts at BTIG began coverage on the digital currency platform with a buy rating and a price target of $ 500. Shares in Coinbase rose higher at the opening of the trade, but have since fallen 1.6%.
“We believe that COIN should be seen as an industry leader in a category characterized by rapid and apparently sustainable growth, driven by significant changes in consumer behavior and the adoption of new technology,” said BTIG analysts Mark Palmer and Andrew Harte, to customers in a Note.
“As such, we think that the multiplicity in which COIN is valued should reflect that distinction, as for other category leaders with open growth opportunities, such as [videotelephony program] Zoom ZM,
[electric-car maker] Tesla TSLA,
and [cloud computing data company] Snowflake SNOW,
they said. BTIG rates those companies to buy, unrated and neutral respectively.
Coinbase is the “gold standard among digital asset exchanges,” they said. The “sustained rapid growth” comes as the industry ecosystem expands and institutional adoption increases, they said. Financial services provider Visa V,
last month announced plans to settle transactions in a “stablecoin” backed by the dollar, while Tesla TSLA,
and digital payment companies PayPal PYPL,
and Square SQ,
all offer transaction options in bitcoin or other cryptos.
The institutional embrace and general enthusiasm of individual investors are some of the factors that sparked enthusiasm for the crypto space this year, with bitcoin BTCUSD,
recently rose to new records of more than $ 60,000, gaining 117% so far in 2021.
Coinbase started trading at $ 381 on Wednesday, up from a reference price of $ 250, climbing all the way to $ 429.54 before finishing at $ 328.28. While some would have liked Coinbase stick to those highs, the day still delivered a 32% gain, meaning it lived up to the hype. At its closing price, Coinbase was valued at $ 85.8 billion.
Read: Not everyone gets crypto. Coinbase’s Emilie Choi plans to change that.
BTIG’s analysts based that $ 500 price target on 16 times the company’s full-year 2024 net revenues of $ 8.2 billion, post-IPO.
“We believe that COIN, the most popular consumer-facing cryptocurrency exchange in the US, is positioned to be the primary beneficiary of the increased adoption of bitcoin and other digital assets as it continues to grow in the US and internationally,” the analysts said.
They believe the company has several ways to build on its first-mover advantage as a ‘ramp for mainstream crypto investors’ such as diversifying its revenue stream away from transaction fees, a dependence that creates potential for volatility as crypto markets grow. fluctuate. The company can also leverage its robust institutional investor platform, a “key driver for future growth,” they said.
At the heart of BTIG’s optimistic view of Coinbase is the company’s market share, which they noted owned 11.3% of the world’s crypto assets as of March 31, up from 4.8% in 2018. At the end of the first quarter of 2021, the exchange had $ 223 billion in crypto assets on its platform. They also saw it as a safe haven under platforms, aided by strict regulatory compliance.
If the “total cryptocurrency market cap continues to grow from about $ 2.1 trillion to a significant multiple of that figure,” the benefit to the company could be huge, “said the BTIG team.
Read: Coinbase list sparked ‘a lot of madness’ and ‘that never ends well,’ bitcoin bull Novogratz tells MarketWatch