Coinbase to Benefit from SEC's Bitcoin ETF Approvals - Analyst Expects Favorable Q4

Wedbush analyst Moshe Katri maintained Coinbase Global Inc COIN with an Outperform and raised the price target from $110 to $180.

COIN's future results are bound to benefit from The SEC's Bitcoin ETF approvals, given the company's dominant role in these ETFs, ETFs facilitation and unlocking of incremental institutional investing in crypto assets (now under 10%), and recent legal/financial woes impacting COIN's peers (re. Binance), the analyst noted. 

Katri also expects P&L tailwinds from the recent December quarter's volatility (40%) increase in crypto asset prices, in line with Q1/CY23's levels, favorably driving the company's trading volume mix. 

Also Read: Vanguard Shuns Bitcoin ETFs, Faces Social Media Backlash From Crypto Enthusiasts: 'Have Fun Staying Poor'

COIN dominates all approved ETFs except 1 (Fidelity), acting as an issuer or custodian. 

Revenue generation will be from custodian fees (annual fees and based on a percentage from ETF's AUM) and ancillary services, including administrative fees, settlement/transfer agent fees, execution, and transaction flow fees). 

With less than 10% of hedge funds investing in crypto assets, the analyst noted that the SEC's ETF approvals will likely expand institutional involvement in the sector, and improved confidence and legitimacy from SEC's ETF approvals provide an opportunity for developing the company's retail and institutional accounts.

The analyst projected Q4 revenue and EPS of $635 million (versus consensus of $784.5 million) and $0.00 (versus consensus loss of $(0.04)).

Price Action: COIN shares traded lower by 6.63% at $141.23 on the last check Thursday.

Also Read: Coinbase Makes Major Move into European Market, Gains French Watchdog's Approval

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

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