Not long ago, Wall Street viewed crypto with a mix of suspicion and contempt. The space which Bitcoin spawned was mostly derided by the mainstream finance world. It’s just a fad, right? A bubble that was about to end in tears for all involved and a haven for criminal activity.
That view is certainly no longer the case. As the trend has refused to die and the ecosystem has blossomed, Wall Street has slowly come round to the idea that crypto is here to stay.
The extent of the transformation from financial bad boy to the possible future of global payments, got real vindication recently with the public listing of Coinbase (COIN). The cryptocurrency exchange made a splashy entrance last week, with a $75.9 billion NASDAQ listing. So, is all the hoopla merited?
Rosenblatt Securities’ Sean Horgan thinks so.
“We are bullish on the long-term upside of COIN as it benefits from the growing adoption and acceptance of cryptocurrency, while our short-term view is more cautious as the stock faces downside risk from a drawdown in the price of crypto,” the analyst said. “Sustainable long-term growth is less uncertain, in our view, and our expectations are potentially conservative given upside risk from institutional adoption and subscription revenue growth.”
And Coinbase is most certainly growing. In 2020, the company generated revenue of around $1.3 billion, increasing year-over-year by 144%. However, in 1Q21 alone, the company’s revenue hit $1.8 billion.
Although, as Horgan notes above, Coinbase to an extent is at the mercy of the crypto cycle, which at the moment is going through one of its boom phases. The pullbacks are notorious, however, and the bear markets are long.
That said, crypto has reached an “inflection point on its road to legitimacy,” and Horgan believes it is a “long-term disruptive trend that is only in its early innings.”
There is evidence to back up the claim. The institutions have moved in and are now scooping up Bitcoin to store as a digital equivalent of gold. And as the recent launch of crypto trading on Venmo – the PayPal owned mobile payment service – can attest, the network effect will create further demand and businesses are “likely to see the value of offering a crypto-checkout option at the point-of-sale.”
“As this ecosystem evolves and becomes more valuable, COIN is a way to capture the upside,” the analyst summed up. “Net/net, we are buyers of COIN as a long-term category leader and pure-play cryptocurrency stock.”
Accordingly, Horgan initiated coverage of COIN with a Buy rating and $450 price target. The implication for investors? Upside of 44%. (To watch Horgan’s track record, click here)
Horgan’s colleagues agree. Based on Buys only – 5, in total – the stock has a Strong Buy consensus rating. The average price target is also a bullish one, and at $479.83, suggests upside of ~50% over the next 12 months. (See COIN stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
