Coinbase Global, Inc. COIN shares may have pulled back amid the recent crypto sell-off but an analyst at Wedbush is bullish on the prospects for the cryptocurrency exchange.
The Coinbase Analyst: Analyst Moshe Katri initiated coverage of Coinbase with an Outperform rating and $275 price target.
The Coinbase Thesis: Coinbase is a "one-stop shop" platform, enabling roughly 56 million retail users, 8,000 institutions, and 134,000 ecosystem partners in over 100 countries to participate in the crypto economy, Katri said in a note.
Coinbase enjoys a first-mover advantage and is therefore the default starting place for new user journeys into the crypto economy, the analyst said. Over 90% of retail users board the platform organically or through word-of-mouth, he added.
The exchange has a dominant and growing share of crypto assets on its platform, with dominant share in two top crypto assets, Katri said: Bitcoin BTC/USD and Ethereum ETH/USD.
Related Link: Coinbase Analysts: Crypto Exchange Well Positioned to Continue Strong Growth Trajectory
The integration of emerging blockchain technology and traditional finance enables crypto to become part of the payments ecosystem, the analyst said.
"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."
Coinbase has also diversified trading revenue exposure by expanding the ecosystem and creating an entire set of ancillary services, he said.
About 25% of retail users also engaged with at least non-investing product in the first quarter, Katri said.
Recent rising mix of institutional trading volumes reduces volatility in overall trading revenues, and this is reflected in recent bullish second quarter and 2021 guidance, the analyst said.
Wedbush is of the view that Coinbase's business model is likely to be more resilient than perceived sensitivity to trading volumes. Furthermore, the market has yet to fully appreciate the monetization potential of the company's ecosystem of ancillary products and services, Katri said.
COIN Price Action: Coinbase shares were up 5.38% at $236.90 at last check, recovering from the nearly 6% pullback seen Wednesday.
Related Link: Why Coinbase Stock Has Analyst Remaining On The Sidelines
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