Coinbase's Diverse Growth Path, From Trading Volumes to Blockchain Innovations: Analyst

JMP analyst Devin Ryan maintained a Market Outperform rating on Coinbase Global, Inc COIN with a $300 price target.

The analyst has identified the firm since its inception report on Coinbase in 2021 as having potential beyond merely a cryptocurrency exchange. 

He said that significant growth opportunities within the exchange business are likely as the market matures, with rising prices generally correlating positively with activity. 

Notably, Coinbase’s spot-trading volumes in the first quarter of 2024 have seen an approximate 106% increase over the fourth quarter of 2023 and a 108% increase over the first quarter of 2023. 

Its derivatives platform has also shown rapid growth, with daily volumes in the current quarter reaching $689 million, a significant jump from $178 million in the previous quarter.

Beyond exchange trading and custody services, Coinbase is seen as playing a vital role in the development of blockchain use cases, including tokenization of real assets in partnership with BlackRock, payments and remittance in early stages of development, Web3, and decentralized applications, Ryan noted. 

Coinbase’s Layer 2 blockchain, Base, is quickly scaling with increasing applications and usage. 

Additionally, Coinbase will likely contribute to and benefit from the innovation in staking and other crypto-native businesses.

Coinbase is positioned not just as a competitor but as a partner for non-crypto native firms entering the space, including corporations, merchants, sovereign states, and traditional institutions, he added. 

The anticipated adoption of spot Bitcoin ETFs is a significant catalyst for the industry. 

As per Ryan, ETF structures are considered transformational, potentially leading to $220 billion in flows, higher prices, and tremendous benefits to Coinbase. 

The introduction of ETFs will likely accelerate Coinbase’s revenue, supported by recent trading volume data. 

Moreover, the analyst noted that the traditional wealth management space, associated with approximately $25 trillion in capital, has yet to fully engage with the market, presenting a substantial opportunity for future growth and adoption.

Ryan projected first-quarter revenue and EPS of $1.23 billion and $0.84.

The stock gained over 233% in the last 12 months. Investors can gain exposure to the stock via First Trust SkyBridge Crypto Industry And Digital Economy ETF CRPT and Fidelity Crypto Industry And Digital Payments ETF FDIG.

Price Action: COIN shares traded lower by 1.54% at $258.53 on the last check Friday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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