Buy And HODL Coinbase Stock? Analyst Says It's A 'Generational Opportunity In Crypto'

The highly anticipated Coinbase Global Inc COIN IPO took place this week with shares opening for trading at $381 and a $100 billion valuation. Analysts continue to share their thoughts on the long-term outlook for the cryptocurrency exchange company.

The Coinbase Analyst: Loop Capital Markets Kenneth Hill initiated coverage of Coinbase Global with a Buy rating and $394 price target. The analyst cleverly calls it a Buy and HODL stock.

The Analyst Takeaways: Hill calls Coinbase more of a customer acquisition play than a cryptocurrency volume story.

“The company’s success or failure will not be predicated on how much volume it trades next quarter like a traditional exchange, it will be driven by how effectively it is able to add customers and gather assets on its platform over time,” Hill said.

Acquiring customers and assets is important for the company during the early days of crypto adoption and could help justify the valuation of Coinbase.

Related Link: 9 Crypto Stocks To Play On The Coinbase Debut 

Possible risks for Coinbase include growing competition, lower fees and loss of interest in the cryptocurrency market.

Hill thinks the risks are outweighed by a “generational opportunity in crypto,” the large customer access Coinbase has and its strength in product.

“The potential to shape the cryptoeconomy could create a defensible position for decades to come.”

The analyst cautions to focus on the long-term success of a stock like Coinbase and not a short-term outlook as there will be potential ups and downs along the way.

The $394 price target is based on a multiple of 20x on fiscal 2022 and fiscal 2023 revenue projections from the analyst.

“Overall, we believe that Coinbase has one of the most attractive long-term opportunity sets in all our coverage, helping our Buy rating.”

COIN Price Action: Shares of Coinbase are up 5.96% to $342 at market close Friday.

(Photo: Coinbase)