Coinbase is feeling the pain of the wider fall in cryptocurrency prices, but Wall Street analysts are rallying the company despite a multi-month drop in the stock market’s share price.
Shares of Coinbase Global Inc have fallen nearly 35% since November 9. And the price has fallen even more sharply this week, in line with the broader crypto public equity and token market, which has been rocked in part by concerns that the Federal Reserve will raise interest rates faster – potentially limiting the liquidity boom that has driven up asset prices from technology stocks to commodities.
Despite this backdrop, Wall Street analysts have grown increasingly bullish on Coinbase shares. This week, JPMorgan reaffirmed its buy rating for the stock, while rival bank Bank of America insolently suggested customers “put money in COIN” in its own buy rating.
The Bank of America upgrade was rooted in the thesis that Coinbase’s income diversification will accelerate away from income from trading-based transactions, which has been the company’s main money generator. . The company charges hefty fees every time its users buy or sell cryptocurrency, but since going public, its executives have tried to stress promises that it will diversify its revenue base.
According to Bank of America, the drivers of diversification for Coinbase will include staking, non-fungible tokens and decentralized finance.
“In our view, the appeal to these non-commercial income streams could also catalyze increased interest in the stock among institutional investors,” Bank of America said.
“While regulatory uncertainty remains an ongoing potential risk, we continue to believe that COIN’s technology / innovation and brand are positive differentiators as more consumers and institutions engage. in various parts of the crypto / digital asset ecosystem, ”he added.
Bank of America’s price target for the stock is at $ 340, up over 45% at the time of writing. The bank also noted a potential rise in Coinbase’s projections for the fourth quarter.
According to its analysis, Bank of America raised its expectations for Coinbase’s annual revenue per unit to $ 45 from $ 30, anchored in the company’s raised outlook for users of monthly transactions. As such, it increased its forecast for net income to $ 1.44 billion, from $ 958 million. Coinbase’s net revenue in the third quarter of 2021 reached $ 1.234 billion.
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