Cryptocurrency stocks often move in tandem with bitcoin’s price. Bitcoin hit $39,746 on Monday – the highest point in over two weeks – after Elon Musk tweeted Tesla would accept the cryptocurrency as payment again once the energy used for mining shifts to more sustainable sources.
“When there’s confirmation of reasonable (~50%) clean energy usage by miners with positive future trend, Tesla will resume allowing Bitcoin transactions,” the electric-vehicle maker CEO said in a tweet.
Bitcoin was trading 9.44% higher around $39,310 on Monday as of 8:30 a.m. ET.
Other crypto-focused names were trading higher Monday, with blockchain technology company Ebang holdings up 4.12% and mining company Bit Digital up 5.43%.
Shares of Coinbase Global could surge 36% to $306 as the crypto-exchange platform represents the best way for investors to gain exposure to the crypto ecosystem, Goldman Sachs said in a note on Monday.
The bank admits that much of Coinbase’s long-term trajectory will be determined by the success of failure of cryptocurrencies as an asset class, but believes the company represents “a blue-chip way through which to invest in the development of the ecosystem,” according to the note.
Coinbase’s crypto ecosystem is powered by its careful approach to regulatory compliance, its crypto-native technology stack and deep talent pool, and its role as an innovation hub for new crypto endeavors, Goldman said.
“While we believe the core business today offers an attractive growth profile with the potential to drive high levels of profitability, we see significant white space for new initiatives to drive more stable and recurring revenue streams to complement the core trading business over the longer term,” Goldman explained.
That “white space” Goldman references includes exposure to innovations in DeFi, or decentralized autonomous blockchain applications, stablecoin-based payments, and the adoption of non-fungible tokens, or NFTs.
“If meaningful parts of the economy can transition to blockchain and crypto-native technology over time, we see significant opportunity for COIN to benefit from its status as a critical element of the financial infrastructure for the ecosystem,” Goldman said.
In the meantime, continued user growth should drive strong growth in transaction revenues over time, which currently represent about 96% of Coinbase’s annual revenue.
Shares of Coinbase have performed poorly since its direct listing in mid-April, which coincided with a top in the price of bitcoin. Coinbase is down 48% from its all-time high of $429.54, based on Friday’s closing price. Shares were up more than 2% in Monday morning trades.
Coinbase stock could climb 22% from current levels because the company is a “one-stop shop” crypto ecosystem, according to Wedbush analysts.
In a note to clients on Wednesday, analysts led by Moshe Katri initiated coverage on Coinbase Global with an “outperform” rating and a $275 price target.
The price target represents a potential 22% increase from Wednesday’s closing price of $224.80.
“We view COIN as a “one-stop shop” platform, enabling roughly 56MM retail users, 8,000 institutions, and 134,000 ecosystem partners in over 100 countries to participate in the crypto economy,” Katri wrote.
Katri and a team of Wedbush analysts went on to describe four factors that give them confidence in Coinbase stock moving forward.
First, they detailed Coinbase’s “first-mover” advantage. The analysts said that Coinbase is the “default starting place for new user journeys into the crypto economy” and noted that over 90% of retail users enter the platform organically or through word-of-mouth.
The second factor that the Wedbush analyst said gives them confidence in Coinbase is the company’s dominant and growing share of crypto assets.
According to Coinbase’s SEC filings, the company holds 11.3% of the entire crypto market capitalization.
The third factor that Wedbush’s Katri highlighted in his note to clients was the integration of blockchain technology and traditional finance on Coinbase that enables cryptocurrencies to become part of the payments eco-system.
According to Wedbush, COIN “creates trusted and easy-to-use products, crypto assets that can be dynamically transmitted, stored, and programmed to serve the needs of an increasingly digital and globally interconnected economy.”
Finally, Wedbush analysts highlighted the growing diversification of revenue streams at Coinbase as a bullish factor for the stock.
Coinbase has moved to create an entire web of ancillary services tied to the crypto market. For example, customers can now borrow cash using bitcoin as collateral on the platform.
Wedbush’s analysts also noted that in the first quarter, on average, 25% of retail users who invested in cryptocurrencies on Coinbase also engaged with at least one non-investing product.
The Wedbush team arrived at its $275 price target for Coinbase by using a 22.7x multiple on 2022’s earnings, assuming a 20% growth rate for revenue and EPS.
Coinbase slid to a record low Friday morning, extending losses for a fifth day in a row amid a plunge in bitcoin’s price.
The cryptocurrency exchange fell 3.87% to as low as $282.07, about a 14% drop from the price on the close of its first day of trading on public markets last week.
Meanwhile, Bitcoin slid below $50,000 on Friday, and simultaneous drops in other digital currencies erased $260 billion off the total value of the cryptocurrency market.
Coinbase’s stock is heavily tied to bitcoin’s price and a “perfect storm” of recent news is likely dragging down both the cryptocurrency and the exchange, said Dan Dolev, Mizuho Securities Senior Analyst, FinTech Equity Research.
The analyst noted that President Biden’s plan for the US to achieve net-zero emissions in the next few decades is likely weighing on bitcoin’s price given the environmental concerns with mining the coin. And, more countries are tightening regulation, including Turkey’s central bank, which is banning the use of cryptocurrencies.
Dolev and Mizuho Associate Ryan Coyne initiated coverage of Coinbase on Wednesday with a price target of $285 and a “neutral rating.”
Dolev told Insider Friday morning that he didn’t anticipate the stock to slide near his price target so quickly. When he initiated coverage on Wednesday, Coinbase was hovering around $320 a share.
Over 80% of Coinbase’s total revenue is reliant on retail transaction fees, and that could pose a risk for Coinbase down the road if other competitors like PayPal and Cash App, whose profits rely less on transaction fees, move to zero-commission trading, Dolev and Coyne said in their Coinbase note.
The analysts conducted a survey of nearly 400 individuals that use either Cash App, Venmo, PayPal, Coinbase, Robinhood, or Chime or some combination of these services in November 2020. The survey found that 55% of Bitcoin traders across Coinbase, PayPal, and Cash App consider low transaction fees as the second most important quality of crypto trading app platforms, right behind security.
In a phone call with Insider Friday morning, Dolev said: “They’ve done a great job, but that reliance on the retail trading fee is a real concern because we know how it ended when it comes to equity commissions.”
Coinbase could surge 21% due to the growing “cryptoeconomy” and a push to lure in more institutional clientele, CFRA Research says.
In a note to clients on Friday, CFRA analysts led by Chris Kuiper, CFA, initiated coverage on shares of Coinbase with a “buy” rating and a $400 12-month price target.
The price target represents a potential 21% jump from Monday’s intraday low of $330 per share.
Kuiper and his team said they believe Coinbase could exceed the Street’s high expectations given the growth potential of the “cryptoeconomy.” The analysts see Coinbase becoming one of the largest financial exchanges worldwide and are betting institutional clients will take note.
“Our base case scenario implies COIN not only becomes one of the largest financial exchanges for crypto but that it is also successful in diversifying into other products and services, most notably those aimed at institutional investors, an area it has more aggressively pursued over the past two years,” Kuiper wrote.
Kuiper and his team also presented earnings per share estimates of $6.89 for 2021 and $3.00 for 2022 in their note to clients and said they see operating margins ramping and then stabilizing at 35%.
In a separate thematic research note that was also released on Friday, CFRA highlighted Coinbase’s push for institutional clients, saying the group is seeking to build a “one-stop-shop” for institutions to access the crypto markets.
CFRA analysts laid out three scenarios for Coinbase’s shares, a bear case where the company trades at $120, a base case where the firm hits $400, and a bull case where shares could rise as high as $840 per share.
The bull case implies a potential 145% jump in share prices over the next year amid a push for crypto from institutions. It also assumes a CAGR of 36% for the next decade, slightly below Amazon’s 40% CAGR from 1998 to 2009, and puts Coinbase’s revenue north of $19 billion by 2027.
CFRA analysts are definitely bullish on the prospects of Coinbase after its historic direct listing.
Coinbase went public on Wednesday of last week and saw its shares open at $381. However, the crypto exchange’s stock then sank as much as 19% in opening day trades, before recovering to end the week at $342.
Some market commentators have called the Coinbase public listing a “watershed moment” for the crypto community. Coinbase is now worth more than General Motors, FedEx, and Twitter.
Shares of Coinbase climbed as much as 6% on Thursday following its debut on the Nasdaq on Wednesday, after various funds managed by Cathie Wood’s ARK Invest snapped up around $250 million worth of shares.
The stock pared gains in early trading, rising 1.1% to $331.75 at 10:35 a.m. in New York.
The listing of Coinbase was celebrated by many cryptocurrency bulls who view the move as a milestone for the digital currency ecosystem that has long faced scrutiny and skepticism.
“Coinbase’s direct listing on Nasdaq is a major step forward in bringing legitimacy and mainstream awareness to the digital asset sector as a whole,” Brad Kam, co-founder of Unstoppable Domains, told Insider.
“For the next billion cryptocurrency users, it will be critical that we focus on ease of use. Millions in funds have been lost due to typos in hard-to-read wallet addresses or simply sending the wrong coin to the wrong wallet,” he said.
Coinbase, one of the world’s most popular and earliest cryptocurrency exchanges, made its public market debut on Wednesday, riding the wave of mainstream investors’ growing interest in digital currencies.
Coinbase’s highly anticipated direct listing resulted in its shares closing at $328.28 on Wednesday, giving the company a valuation of $85.7 billion – around 10 times what it was last valued at as a private company, according to PitchBook.
That’s up 31.3% from Coinbase’s reference price of $250. But because it opted for a direct listing, no shares traded at that price, instead opening at a price of $381.
CEO and cofounder Brian Armstrong’s stake – 2.75 million Class A shares and 36.9 million Class B shares – is now worth a combined $13 billion.
Two Coinbase executives, Chief Product Officer Surojit Chatterjee and Chief Legal Officer Paul Grewal, both of whom joined the company less than 15 months ago, have stakes worth a combined $957 million.
At Wednesday’s closing price, Chatterjee’s 2 million Class A shares are worth $657.2 million, while Grewal’s 915,331 Class A shares are worth $300 million.
Chatterjee joined Coinbase in January 2020 after having previously been at Google for 11 years. Grewal joined just last summer, leaving his four-year tenure as a vice president and deputy general counsel at Facebook.
Shares of Coinbase climbed as much as 13% on Wednesday in its hotly anticipated trading debut on the Nasdaq.
The direct listing had a $250-per-share reference price, and opened at $381 before hitting an intraday high of $429.54, which was 13% above its opening price.
The $381-per-share opening price put Coinbase’s valuation at $99.5 billion, giving it a bigger market capitalization than such established US companies as General Motors, FedEx, and Gilead Sciences.
Coinbase is the first major cryptocurrency exchange to go public, and investors see its direct listing as a major milestone for bringing cryptocurrencies in the mainstream. Bitcoin hovered near an all-time high above $63,000 when trading commenced, having hit a record of $64,869.77 earlier in the day.
“We look at the Coinbase listing as an additional validation of the space, and a major PR opportunity for the entire industry to shine as the future of finance,” said Alex Mashinsky, CEO and co-founder of Celsius, a cryptocurrency yield-earning platform.
He added: “Coinbase has more users and more revenues than many of the largest Wall Street players and is more profitable than any major exchange, this validation puts most skeptics at a crossroads having to re-evaluate their denial and frustration with the disruption coming at them from all sides.”
David Trainer, New Constructs CEO, said in a stock research note that Coinbase’s $100 billion expected valuation implies that Coinbase will become the largest exchange in the world by revenue, which isn’t guaranteed given the existence of competitors like Gemini, Kraken, and Binance.
In the earnings report, the company warned that its financial results have fluctuated drastically on swings in crypto trading volume-something investors should keep an eye on, Trainer said.
“Trading volume, and therefore transaction revenue currently fluctuate, potentially materially, with Bitcoin price and crypto asset volatility. This revenue unpredictability, in turn, impacts our profitability on a quarter-to-quarter basis,” Coinbase acknowledged in its prospectus.
Coinbase is set to make its public trading debut on Wednesday and some market commentators are questioning its lofty valuation. Manhattan Venture Partners, an early backer of the crypto exchange, believes the massive figure is justified.
Santosh Rao, the head of research at the merchant bank, says a $100 billion valuation for Coinbase is “totally reasonable” given the disruptive nature of the crypto firm.
Manhattan Venture Partners was an early investor in Coinbase as well as a number of other big-name tech companies like SpaceX, Palantir, and Draft Kings.
Rao sat down with CNBC on Wednesday to discuss Coinbase’s public debut and his firm’s investments.
The head of research highlighted the fact that based on estimated revenues and earnings for 2022, at a roughly $100 billion valuation, Coinbase will trade at just over 11x sales and 27x EBITDA.
Those figures aren’t outlandish for a company that has demonstrated consistent growth, according to Rao.
Coinbase released impressive first-quarter results on April 6 that showed a 117% quarter-over-quarter increase in monthly transacting users. The company also earned more revenue in the first quarter of 2021 ($1.8 billion) than it did in all of 2020 ($1.3 billion).
The rising revenue came amid a historic run for bitcoin that saw the cryptocurrency rise more than 300% in 2020, and an additional nearly 100% in the first quarter of 2021 alone.
Some market commentators are predicting a further 10%+ breakout moving forward as well.
When asked whether crypto prices need to keep going higher in order for Coinbase to maintain its lofty valuation, Rao said it would help, but argued the company has a range of services on offer to offset any downfall in crypto prices.
“That’s their core business at this point, but they have other services too. And they have a subscription product coming up, a whole range of services, the custody services, they have a number of other levers to pull as they go up,” Rao said.
The head of research added that, in his view, there’s no reason why crypto prices should stop going up as investors are starting to realize the space will become “an integral part of the financial system going forward.”
Rao also noted that of the best features of Coinbase is that it’s “agnostic” towards individual cryptocurrencies, meaning if bitcoin falls and other cryptocurrencies rise, Coinbase will still benefit.
The head of research at Manhattan Venture Partners ended the interview by saying that Coinbase has the breadth, scale, and technology to keep competitors at bay over the long haul.
Coinbase CEO Brian Armstrong said on Wednesday that the company will diversify its revenue stream away from transaction fees over the next five to 10 years.
According to a company filing, 96% of the company’s sales in 2020 came from fees it charged users. He anticipates that will decline to around 50% as new revenue streams like credit cards and staking services grow. Armstrong also said users can expect fee compression over the long term.
“We’ve started to monetize a number of things,” he told CNBC in an interview on Wednesday, detailing a number of examples. “And my guess is that in five or 10 years, you’ll see them being maybe even 50% or more of our revenue.”
Currently, Coinbase is the largest cryptocurrency exchange in the US, and offers a wide variety of products including custodial accounts for institutions, digital wallets for retail investors, as well as its own US dollar stablecoin.
In 2019, the professional platform of Coinbase updated its fee structure by increasing some maker fees as high as 233%, as reported by CoinTelegraph. Coinbase then amassed $1.1 billion in direct revenue following this change in 2020, more than double the $482 million revenue it made in 2019.
Coinbase is going public via direct listing on the Nasdaq on Wednesday, viewed by many cryptocurrency bulls as a milestone for the digital currency ecosystem.
“Coinbase’s listing is for crypto what Google’s IPO was for the internet,” Antoni Trenchev, co-founder and managing partner of Nexo, a regulated financial institution for digital assets with over $12 billion in assets under management, told Insider. “Just over 15 years on, it’s hard to imagine life pre-Google.”