When cryptocurrency exchange Coinbase Global went public last April, many people said it marked peak cryptocurrency. That was wrong. Bitcoin at the time was trading around $61,000.
After a detour in the summer to about $30,000, the original crypto is back near all-time highs recently nearing $70,000. Ethereum is also near record levels, and the entire sector has a market value of about $3 trillion.
Josh Steiner, Sector Head of Financials at Hedgeye, which offers a proprietary Bitcoin Tracker product, explains in the following video how the growth of crypto is similar to where the internet was in 1997 (see the chart), and why Coinbase is a “rocketship” of a stock.
We also feature excerpts from Goldman Sachs’ and Morningstar report on Coinbase following the company’s earnings report.
Why Coinbase (NASDAQ:COIN) is a “Rocketship” – Hedgeye Video
Goldman Sachs maintains its buy rating for Coinbase despite the cryptocurrency exchange’s weaker-than-expected third quarter earnings report.
Coinbase’s total net revenue dropped 39.3% from $2.033 billion to $1.234 billion during the third quarter, according to Tuesday’s earnings report.
“We think there’s an abundance of innovation in this space, and we want to double down on those opportunities,” Emilie Choi, president and chief operating officer of Coinbase, said during the company’s earnings call Tuesday.
Some of those opportunities reside within non-fungible tokens (NFTs) and Web3.”
The company entered Q3 with “softer crypto market conditions, driven by low volatility and declining crypto asset prices,” Coinbase said.
However, market conditions improved toward the end of Q3 and have continued into Q4, the report noted.
Goldman Sachs analysts point to Coinbase’s new initiatives as a reason to be optimistic about the stock.
“While shares will likely give back some of their recent strength heading into the quarter, we see a number of reasons to be positive,” Goldman analysts wrote.
Coinbase’s growing subscription services and the upcoming NFT platform are going to advance the company in upcoming quarters, the report noted.
“While COIN remains a difficult to predict financial model with broader adoption trends and the development of the crypto ecosystem driving shares on a day-to-day basis, we continue to believe COIN represents one of the best ways to get exposure to the expansion of the crypto ecosystem, and we remain constructive on COIN’s ability to continue to innovate and drive further adoption of crypto assets,” the report said.
Morningstar analysts took a similar view.
“We are raising our fair value estimate for Coinbase to $225 from $201,” Morningstar analysts wrote.
“Our fair value estimate benefited from a $20 adjustment for higher near-term transaction fee revenue as cryptocurrency markets set new highs, and a $15 increase from higher projected revenue from Coinbase’s staking and new NFT businesses.”
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