On Wednesday, B.Riley initiated coverage on Coinbase (NASDAQ:COIN) Global Inc. (NASDAQ: COIN), assigning a Neutral rating to the stock with a price target of $185.00. The firm highlighted Coinbase as an industry leader and a trusted platform for both institutions and individuals participating in the digital currency economy.
B.Riley pointed out that the market is undergoing a significant shift from traditional institutional money to network-based money, often referred to as cryptocurrency. This transition is still considered to be in its early stages, with Coinbase positioned as a unique entity within the capital markets sector due to its status as both a first mover in the digital assets space and a well-capitalized scale operator.
Since Coinbase's initial public offering, the company's earnings per share (EPS) have been highly volatile. This volatility is largely attributed to the stock's strong correlation with the fluctuating asset prices of digital currencies, such as Bitcoin. The firm's analysis suggests that the volatility in Coinbase's profits has alternated between strong profits and losses.
B.Riley anticipates that the shares of Coinbase will likely remain range-bound in the near term. The firm expects this trend to continue until the upcoming election is concluded and further regulatory clarity is provided. Additionally, the firm suggests that the stock may also be influenced by idiosyncratic catalysts that could potentially offer visibility into more consistent profit growth for Coinbase.
In other recent news, KeyBanc Capital Markets has raised its price target for Robinhood (NASDAQ:HOOD) Markets to $30, maintaining an Overweight rating. This adjustment reflects a positive outlook based on recent operational data. Meanwhile, Coinbase Global Inc. has seen several price target revisions from analysts, including a reduction by US Tiger Securities to $380, anticipating a decrease in revenue by 6% for Q3 2024 due to a projected 14% drop in trading volume. BofA Securities also revised its price target for Coinbase to $196, maintaining a neutral stance.
These are recent developments in the companies' trajectories. Robinhood's revised price target by KeyBanc indicates optimism about the company's long-term potential to gain market share. In contrast, Coinbase is facing a decrease in revenue for the third quarter of 2024, as projected by US Tiger Securities and BofA Securities.
Coinbase also announced plans to remove select stablecoins in the European Economic Area by the end of the year, aligning with upcoming Markets in Crypto-Assets regulation. In another development, Coinbase continues to challenge the Securities and Exchange Commission in a federal appeals court, seeking clarity on when a digital asset is considered a security. This legal action is part of the broader cryptocurrency sector's push for clear regulatory guidelines.
InvestingPro Insights
Coinbase's financial metrics and market performance align closely with B.Riley's analysis. According to InvestingPro data, Coinbase has shown impressive revenue growth, with a 74.22% increase over the last twelve months and a substantial 108.29% quarterly growth in Q2 2024. This growth trajectory supports B.Riley's view of Coinbase as an industry leader in the evolving digital currency economy.
The company's profitability is evident from its robust gross profit margin of 86.1% and operating income margin of 27.09% over the last twelve months. An InvestingPro Tip suggests that analysts anticipate sales growth in the current year, which could potentially address the profit volatility concerns raised by B.Riley.
Reflecting the stock's volatility mentioned in the article, an InvestingPro Tip notes that Coinbase's stock price movements are indeed quite volatile. This is further illustrated by the contrasting price returns: a strong 172.92% return over the past year, but a -18.21% return over the last three months.
For investors seeking a deeper understanding of Coinbase's financial health and market position, InvestingPro offers 12 additional tips, providing a comprehensive analysis to inform investment decisions.
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