8 expert predictions ahead of Coinbase’s hotly anticipated IPO next week

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Coinbase’s debut on the Nasdaq on April 14 has been eagerly awaited, especially by cryptocurrency bulls who view the listing as a milestone for the digital currency ecosystem.

Adding to the excitement, the cryptocurrency trading giant reported a whopping $1.8 billion revenue in the first quarter of the year on Tuesday, compared to the $1.3 billion for all of 2020.

On the back of the eye-popping earnings, DA Davidson analyst Gil Luria increased his price target by 125% to $440 from $195. The analyst derived his adjusted price target from a 20x multiple based on the company’s expected revenue this year.

The record-breaking quarter for Coinbase moved in lockstep with bitcoin’s surge, which thus far has soared more than 100% year-to-date and 600% in the past 12 months.

While bitcoin’s rally has stalled in the past days, it tested the $60,000-level record last week after Visa enabled the use of USD Coin and CME Group revealed it is expanding its suite of crypto offerings with micro bitcoin futures. On Thursday, billionaire Rick Caruso’s real estate firm announced that it will start accepting bitcoin as rent payment – a first in the residential and retail real estate space.

Coinbase, the largest cryptocurrency exchange in the US, offers a wide range of products and services from trading and custody services to offering a stablecoin pegged to the US dollar. It has 43 million users in more than 100 countries.

Read more: A 29-year-old self-made billionaire breaks down how he achieved daily returns of 10% on million-dollar crypto trades, and shares how to find the best opportunities

Here’s what eight crypto-industry experts had to say about Coinbase’s public debut:

“The direct listing of Coinbase is a huge market signal, however, we’re yet to see whether the long-term effect on the crypto industry will be positive or negative … We are big fans of what Coinbase has done to date, but we worry about the centralizing effects of the concentration of users on a single platform, negating the true benefits of decentralization.” – Alberto Jauregui, growth lead of Pocket Network, a blockchain data ecosystem

“The Coinbase listing is a huge step for the digital asset industry from both a mainstream adoption and regulatory point of view, signifying the acceptance of cryptocurrency business in traditional finance. Other exchanges following in Coinbase’s footsteps are entirely based on their readiness to go public. This will pave the way for Coinbase’s competitors to join the IPO movement. Kraken will most likely be next.” – Gunnar Jaerv, COO of First Digital Trust, a leading digital asset custodian in Hong Kong

“The success of Coinbase and its direct listing will bring on the next wave of new users to cryptocurrencies by continuing to solve the challenges of owning, storing, and providing custody to digital assets. This public listing will also have an enormous impact on the entire digital asset industry by opening the gate to further Wall Street and institutional investment and confirming that the future of finance is decentralized.” – Leo Cheng, co-founder and project lead at C.R.E.A.M. Finance, a decentralized lending protocol

“Going public is stepping into the big leagues. Crypto is becoming part of the traditional finance sector … This level of adoption seemed like a dream scenario just a year ago. A lot of users still keep funds on Coinbase and look at it as merely a trading platform. But more are beginning to wake up and understand that Coinbase is an important gateway to getting started in the crypto sector.” – Kadan Stadelmann, CTO of Komodo, an open-source technology workshop and blockchain solutions provider

“When we entered into the market three years ago it was a new and novel industry, everyone had to wrap their heads around what we were doing as a business, the terminology we were using, and the potential value a bitcoin mining operation could hold. People saw us as a speculative gamble. This year we are seeing people move beyond that. Crypto is not a novel thing anymore, but the hot new asset class for equities.” – Emiliano Grodzki, CEO of Bitfarms, a global public bitcoin mining operation

“The growth and expansion of cryptocurrencies had always been at odds with the interests of traditional financial systems … The Coinbase direct listing unites these two sides of finance in the success of this licensed and regulated company. Traditional investors who purchase Coinbase stock will indirectly speculate on the crypto market and similarly, crypto traders who own Coinbase stocks will have a vested interest in the success of the company.” – James Anderson, CEO of RioDeFi, an ecosystem of interoperable financial products

“The Coinbase direct listing is going to further build credibility and legitimacy for the cryptocurrency markets, which have already received huge institutional interest and flows since the start of 2021. But once the celebrations settle and the mainstream awareness of the cryptocurrency markets grow, eyes will turn to the alternative burgeoning decentralized financial (DeFi) industry and structures like DAOs (decentralized autonomous organizations) will become common knowledge.” – Samantha Yap Founder and CEO at YAP Global, a PR agency specializing in crypto, blockchain, and fintech

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Coinbase’s expected $100 billion valuation is ‘far too high’ given the increasing competition in the cryptocurrency market, a veteran stock analyst says

coinbase mobile phone app
In this photo illustration, Bitcoin course’s graph is seen on the Coinbase cryptocurrency exchange application on February 12, 2018 in Paris, France. Founded in June of 2012, Coinbase is a digital currency wallet and platform where merchants and consumers can transact with new digital currencies like bitcoin, ethereum, and litecoin. The company is based in San Francisco, California generated in 2017 a record turnover of one billion dollars (about 810 million euros) with exceptional trading volumes, which made it the most downloaded mobile app on iOS last December.

  • Coinbase’s rumored $100 billion valuation is “far too high,” said New Constructs CEO David Trainer.
  • The cryptocurrency exchange is set to go public via direct listing in the near future.
  • Trainer said increasing competition in the crypto exchange market will weigh on Coinbase’s lofty valuation.
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Coinbase could go public via a direct listing as early as March, but New Constructs CEO David Trainer says investors should not buy the stock if the valuation is anywhere close to current expectations.

The cryptocurrency exchange platform has a rumored valuation of roughly $100 billion, which is “far too high” given the increasing competition in the market, Trainer said in a recent note.

Although the company achieved profitability in 2020, the current 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, he added.

In 2020, transaction revenue represented over 96% of Coinbase’s net revenue, according to Coinbase filings. Trainer points out that the exchange’s transaction revenue as a percent of trading volume is 57 times higher than the Intercontinental Exchange, which runs the New York Stock Exchange.

Competitors will likely emulate Coinbase’s high margins, and the exchange’s “competitive position will inevitably deteriorate,” Trainer said.

“…if stock trading fees are any indicator for crypto trading fees, we should expect them to quickly go lower if not to zero,” said the research analyst. “Competitors such as Gemini, Bitstamp, Kraken, Binance, and others will likely offer lower or zero trading fees as a strategy to take market share, which would start the same “race to the bottom” that we saw with stock trading fees in late 2019.”

“The likelihood of Coinbase maintaining such high fees is very low in a mature market,” he added.

With an expected valuation of $100 billion, Coinbase would earn a “neutral” rating from New Constructs.

Last week, D.A. Davidson initiated coverage of Coinbase with a “buy” rating and price target of $195. However, the analysts said it’s too early to tell if Coinbase will become the “Amazon of crypto” or the failing Netscape.

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Coinbase’s direct listing is ‘an Amazon moment for crypto,’ and will bring cryptocurrency further into mainstream finance, D.A. Davidson says

Coinbase Founder and CEO Brian Armstrong
Coinbase Founder and CEO Brian Armstrong

  • Coinbase’s upcoming direct listing will be an “Amazon moment” for cryptocurrencies, according to D.A. Davidson. 
  • The firm initiated coverage of the crypto exchange with a “buy” rating and $195 price target. 
  • D.A. Davidson said the public debut will be a milestone for the convergence of cryptocurrency and traditional finance.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

Coinbase’s upcoming direct listing will be a milestone event, marking the covergence of cryptocurrency and traditional finance, according to a team of D.A. Davidson analysts. 

In a recent note D.A. Davidson initiated coverage of the cryptocurrency exchange with a “buy” rating and a price target of $195. Analysts led by Gil Luria said Coinbase’s public debut will be the “Amazon moment for crypto,” as cryptocurrency will move from “a large curiosity to becoming the future path for much of the financial system.” 

Coinbase will be the first major cryptocurrency exchange to go public. According to the analysts, the exchange’s superior user experience has positioned it as the “leader” in facilitating the onramp/off-ramp from government currency (like dollars) in crypto (like bitcoin.)

“With a big target on its back as a crypto wallet, (to date) Coinbase has been able to manage both government regulators as well as highly motivated hackers, while providing consumers with the experience they expect from a large financial institution,” the analysts added.

As both an exchange and broker, Coinbase’s competition includes Grayscale, Kraken, and Gemini, as well as broader consumer digital wallets like Square, PayPal, and Robinhood, said D.A.Davidson.

The firm’s $195 price target is based on 2021 revenue estimates, but the firm has not been able to connect with Coinbase during its quiet period. Revenue in 2020 was $1.28 billion, a jump from $553.7 million in 2019, according to a consolidated operations statement included in Coinbase’s filings.

For the year ended December 31, 2020, transaction revenue represented over 96% of net revenue. Bitcoin has soared 68% in 2021 and it’s unclear how that affects revenue estimates.

D.A. Davidson noted Coinbase is a more speculative investment than other companies it covers. They also noted the unusually high risks associated with the volatility of crypto prices, and said it’s too early to tell if Coinbase will actually become the Amazon of crypto or the Netscape.

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