ETFs
Coinbase Gets an Upgrade: Analyst Highlights Wider Audience, New Spot ETFs, and Less Focus on Meme Coins – Coinbase Glb (NASDAQ:COIN)
BofA Securities analyst Mark McLaughlin has been upgraded Coinbase Global, Inc. (NASDAQ:PIECE OF MONEY) to Neutral from Underperformance, increasing the price prediction to $217 from $110.
According to the analyst, the upgrade was driven by retailers’ re-engagement with crypto and mining. leverage from previous spending cuts. Risks, however, included continued over-regulation and a short-term reliance on transaction revenues for profitability.
According to the analyst, the current macroeconomic environment has been positive for cryptocurrency market capitalization appreciation and trading volumes.
The current market situation is stronger given the broader audience of investors, including institutional investors, new cash ETFs, and the greater maturation of brokerage services.
The market also benefited from a greater focus on a concentrated set of mature coins (the top 10 coins represent 83% of the market cap compared to 73% in November 2021). with less emphasis on the parts themselves.
Coinbase’s spending discipline and ability to benefit from operating leverage after significant spending reductions in 2022 will help it maintain profitability going forward, the analyst wrote.
During the 2022-2023 “crypto winter,” Coinbase significantly reduced its cost base to more appropriate levels, aiming to achieve profitability amid precipitous declines in trading volumes and revenue.
Additionally, increased diversification of revenue sources, less correlated with overall volumes, should mitigate earnings volatility.
The analyst warned of the regulatory overhang surrounding the lawsuit and the U.S. Securities and Exchange Commission’s timeline. While the analyst doesn’t see a major update for the rest of the year, he expects a trial in 2025 that will provide more clarity on future regulations.
PIECE OF MONEY Price Action: Coinbase shares are trading up 5.31% at $209.74 at last check Friday.
Photo Rafapress on Shutterstock
ENTER TO WIN $500 IN STOCK OR CRYPTO
Enter your email and you’ll also receive the ultimate morning update from Benzinga AND a free $30+ gift card!
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.