Coinbase Shares Are Very Unattractive Heading Into First Half, Mizuho Securities Says
The bank sees “significant downside to consensus revenue expectations.”
:format(jpg)/cloudfront-us-east-1.images.arcpublishing.com/coindesk/G3WNRBOX2FAPBJUUAL6OOQH3V4.jpg)
NEW YORK, NY - APRIL 14: Monitors display Coinbase signage during the company's initial public offering (IPO) at the Nasdaq market site April 14, 2021 in New York City. Coinbase Global Inc. is the largest U.S. cryptocurrency exchange, debuting today through a rare direct listing. (Photo by Robert Nickelsberg/Getty Images)
/arc-photo-coindesk/arc2-prod/public/LXF2COBSKBCNHNRE3WTK2BZ7GE.png)
Renewed signs of a “crypto desert” coupled with declining yields make Coinbase especially unattractive heading into the first half of this year, Mizuho Securities said in an analyst report published Tuesday, cutting its price target for the shares to $220 from $300.
Mizuho forecasts the crypto exchange had trading volume of about $525 billion in the fourth quarter of 2021, up around 60% sequentially, implying revenue of about $2 billion. This is relatively in line with consensus, the analysts wrote.
For the first quarter, the bank sees “significant downside to consensus revenue expectations,” and if current trends persist, the company could fall short of earnings estimates, analysts led by Dan Dolev wrote.
The bank lowered its Coinbase medium-term estimates to reflect “pressure on crypto end-markets and persistent take rate pressure.”
Further bitcoin appreciation, crypto market volatility and the success of new revenue streams are potential upside risks to the bank’s price target. Downside risks include pricing compression and the threat of a so-called crypto winter, during which the market cap of cryptocurrencies shrinks and volatility falls, the report said.
Coinbase shares traded at an all-time low of about $162.54 on Monday, tracking weakness in the crypto market, before rebounding to close at $191.48. The company went public last April with an opening reference price of $250. The stock closed more than 3% lower on Tuesday at $185.63.
Disclosure
Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is an award-winning media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. In November 2023, CoinDesk was acquired by Bullish group, owner of Bullish, a regulated, institutional digital assets exchange. Bullish group is majority owned by Block.one; both groups have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary, and an editorial committee, chaired by a former editor-in-chief of The Wall Street Journal, is being formed to support journalistic integrity.
Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.