Shares of the currency exchange Coinbase Global faltered on Thursday, but at least one positive call from Wall Street encouraged them.
BTIG analysts began offering coverage on the digital currency platform with a buy rating and a price target of $ 500. Coinbase’s share rose higher in the opening trade, but has since fallen by 1.6%.
“We believe that COIN should be seen as a market leader in a category characterized by rapid and seemingly sustainable growth, driven by significant changes in consumer behavior and the adoption of new technologies,” said Mark Palmer and Andrew Harte, BTIG analysts, told customers comment.
‘As such, we think that the multiple at which COIN is valued should reflect the 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 assesses the companies that are bought, regardless and neutral, respectively.
Coinbase is the ‘gold standard among digital asset exchanges’, they said. Its “sustained rapid growth” comes as the industry’s ecosystem expands and institutional adoption increases, they said. Financial Services Company Visa V,
last month announced plans to trade in a “stable currency” backed by the dollar, while Tesla TSLA,
and digital payment companies PayPal PYPL,
and Square SQ,
all offer transaction options in bitcoin or other cryptocurrencies.
The institutional embrace and general enthusiasm by individual investors is one of the factors that helped fuel enthusiasm for the crypto-space this year, with bitcoin BTCUSD,
has recently risen to new records of more than $ 60,000, with a gain of 117% so far in 2021.
Coinbase started trading at $ 381 on Wednesday, compared to a reference price of $ 250, and climbed to $ 429.54 before ending at $ 328.28. While some would like to see Coinbase hang on to the highs, the day still delivered a 32% profit, meaning it lives up to the hype. At its closing price, Coinbase was valued at $ 85.8 billion.
Read: Not everyone gets crypto. Emilie Choi of Coinbase plans to change that.
The BTIG analysts set the price target of $ 500 based on 16 times the net income of the company’s 2024 annual net income of $ 8.2 billion, after the initial public offering.
“We believe that COIN, the most popular cryptocurrency exchange in the US, positioned against the consumer, is a primary beneficiary of the increasing acceptance of bitcoin and other digital assets as it continues to scale in America and internationally,” the analysts said. said.
They believe that the company has several ways to build on its advantage as a ‘ramp for mainstream crypto-investors’, such as diversifying its revenue stream away from transaction fees, a dependency that creates potential for volatility as the crypto- markets fluctuate. The company can also leverage its robust institutional investor platform, a ‘key driver for growth going forward’, they said.
At the heart of BTIG’s bullish view of Coinbase is the company’s market share, which it said had 11.3% of the world’s crypto asset on March 31, up from 4.8% in 2018. At the end of the first quarter of 2021, the exchange held $ 223 billion worth of crypto assets on its platform. They also considered it a safe haven under platforms, aided by the strict compliance with regulations.
If the “total market capitalization of the cryptocurrency continues to grow and rises from about $ 2.1 billion to a significant multiple of the figure, the upside-down business could be large,” the BTIG team said.
Read: Coinbase offering fueled ‘a lot of madness’ and ‘that never ends well’, bitcoin bull Novogratz told MarketWatch