Cryptocurrency exchange and infrastructure provider Coinbase (NASDAQ: COIN) recently noted that “Bitcoin is not boring.”
That may be one of the leaders for understatement of all time, but it also makes for a fine market in which Coinbase itself can operate. I maintain my bullish stance on Coinbase, because it’s still the premiere way to access the entire cryptocurrency concept. It also helps that some of Coinbase’s fundamentals are currently conducive to buying in.
Coinbase’s year in share prices so far has been marked by incredible volatility. The company led off the year with a precipitous drop, going from highs of around $342 to lows of around $224 in a little over a month.
A slow, painful, and frequently retraced recovery followed, and ran from May until October. October’s second half was fantastic for Coinbase. The company managed to gain around $100 in share prices, going from $246 in mid-October to nearly $360 in the space of about three weeks.
However, these gains proved short-lived, as the company began a plunge that continues to this day. Currently, the company is retesting the lows seen back in May.
The latest news has been almost as volatile. First, the good news: Oppenheimer declared Coinbase to be a “top pick” for the 2022 season.
With cryptocurrency becoming increasingly mainstream, the analyst noted, that makes Coinbase a logical target for further gains. Coinbase also announced plans to get more closely involved with the Metaverse, Facebook’s massive virtual reality project. Coinbase’s primary aim is to keep the Metaverse free and open. Coinbase isn’t the first cryptocurrency project to get involved therein, but it may be one of the biggest.
The bad news, however, is sufficiently plentiful to be concerning. A recent Amazon Web Services outage caused a likewise outage at Coinbase.
However, it seems to be back up and running now. Additionally, Coinbase’s CEO, Brian Armstrong, is facing legal troubles over Knowledgr. Knowledgr is a blockchain startup that Armstrong invested in.
Allegedly, he did so planning to putting its tools to work at a potential competitor known as ResearchHub. That legal matter is only getting started, however, so it will be a while until that resolves.
Wall Street’s Take
Turning to Wall Street, Coinbase has a Strong Buy consensus rating. That’s based on 13 Buys, one Hold, and one Sell assigned in the past three months. The average Coinbase price target of $406.33 implies 56.7% upside potential.
Analyst price targets range from a low of $160 per share to a high of $600 per share.
Still a Leading Pick Salesman
While there are certainly troubles on the horizon for Coinbase, there’s still a lot to like here. Granted, the company’s share price has been extremely volatile.
This is still the place that retail investors are going to pick up their Bitcoin and other cryptocurrencies, like Ether. If the Metaverse actually takes off, it’s going to take some kind of economic underpinning. A digital money alternative like that which Coinbase routinely handles could do that job marvelously.
Even if such a play never takes off fully, there’s still value in Coinbase. That growing diversity helps the company as well. It may be an investment platform.
It may be the financial underpinning of virtual reality. Either way, Coinbase stands to be a big part of the future. It’s perhaps the leader in selling picks and shovels in the middle of a gold rush.
Let’s not forget: those were the people who really cleaned up. It may be a while before investors clean up, though; Coinbase’s dividend history is nonexistent. However, the company has only been trading for nine months. That lets us to cut it a bit of slack.
Concluding Views
Coinbase is an increasingly diverse potential investment. Its slate of use cases is on the rise and that puts the company in an excellent position going forward. Plus, the company is currently the main source for acquiring cryptocurrency.
There are some potential problems ahead for Coinbase. Many of these are comparatively minor. Even if Coinbase’s CEO did ultimately steal that research in the Knowledgr case, replacing the CEO should fix things.
Coinbase is still going to be a big name in crypto. With crypto on the rise, that could mean a serious win going forward.
Disclosure: At the time of publication, Steve Anderson did not have a position in any of the securities mentioned in this article.
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