Coinbase and Robinhood: JMP Chooses the Best Crypto Stocks to Buy
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Coinbase and Robinhood: JMP Chooses the Best Crypto Stocks to Buy

The fourth Bitcoin halving passed quietly last month, when the 840,000th block was mined. Despite the official increase in scarcity, BTC prices remained relatively stable. This stability could present new opportunities for prospective crypto investors. Historically, halving events have been accompanied by price increases, as the number of coins awarded for each mined block decreases.

However, the unregulated nature of the cryptocurrency market can be intimidating. Nonetheless, this should not deter potential investors. Those who want to capitalize on the crypto market but are hesitant to buy the currencies directly can consider investing in crypto-related stocks. These stocks are regulated, thereby reducing the risk to investors while retaining the quality of the investment.

Covering the cryptos for investment bank JMP, 5-star analyst Devin Ryan comes down with firm opinions on the best crypto stocks to buy in the current environment. Ryan looks at Coinbase (NASDAQ:COIN) and Robinhood (NASDAQ:HOOD), two major names in the crypto trading world, and his opinions are worth a closer look.

We’ve used the TipRanks database to find out what the rest of the Street has to say about these two picks. Let’s dive in.

Coinbase Global

We’ll start with Coinbase, one of the main cryptocurrency digital exchanges. The company operates an online platform and cryptocurrency wallet, accessible from both PCs and mobile devices, offering trading operations in most of the major cryptos. Users can buy, sell, and trade in Bitcoin, Ethereum, Dogecoin – 248 cryptos in total. Coinbase makes its app interface simple and intuitive to use, to make the trading process as easy as possible – and to apply outside of the digital currency niche.

The service has proven popular, and Coinbase is available in over 100 countries. The app hosts approximately $312 billion in quarterly volume, and the company backs its trading with more than $348 billion in total listed assets. Coinbase is also working to improve trust in the crypto universe and is committed to maintaining compliance with the best practices of traditional financial services firms.

Coinbase’s share price tends to track the price of Bitcoin, and when the flagship cryptocurrency started gaining earlier this year, COIN shares also saw a surge. The increased investor interest in the crypto platform company translated into solid gains for the stock, which is up ~220% over the last 12 months. The company now boasts a market cap of nearly $49 billion.

The company’s financial results were solid in the first quarter of this year. Coinbase reported just over $1.6 billion in total revenue, beating the forecast by $300 million and growing 112% year-over-year. At the bottom line, Coinbase realized an EPS of $4.40, a sharp turnaround from the 34-cent net EPS loss reported in 1Q23 – and beating the forecast by $3.33 per share.

Coinbase caught analyst Devin Ryan’s eye primarily for its growth potential. The analyst, who is rated #21 overall by TipRanks, writes of the company, “While growth from here will not be linear, we think it is becoming more evident to the market that Coinbase is building one of the most holistic on ramps into the digital asset economy, and for virtually all user types that include retail (for numerous use cases beyond trading), institutions, merchants, developers (and more). Simply put, this business is evolving into much more than just a marketplace to buy and sell digital assets, which has been our consistent thesis.”

Looking ahead, Ryan goes on to outline what specifically incentivizes Coinbase shares right now, saying, “We think investors should size positions with a view around the stock as a higher-risk proposition given inherent volatility in the crypto markets, and also ongoing uncertainty around regulatory and legislative matters. With that said, we see the risk/reward opportunity as attractive…”

Taken all together, these comments support Ryan’s Outperform (i.e. Buy) rating on Coinbase shares, and his $320 price target shows his confidence in a ~61% upside potential for the coming year. (To watch Ryan’s track record, click here)

Overall, Coinbase gets a Moderate Buy consensus rating from Wall Street’s analysts, based on 21 recent reviews that break down to 9 Buys, 9 Holds, and 3 Sells. The shares are trading for $199.17, and their $244.37 average price target suggests a one-year upside of ~23%. (See Coinbase stock forecast)

Robinhood Markets

The second stock we’ll look at is online financial services company Robinhood. Robinhood features commission-free trading on its platform, in stocks, ETFs, IRAs – and in cryptocurrencies since 2022. Robinhood introduced its mobile app in 2015 and has quickly become popular with younger investors.

Robinhood offers a number of advantages for younger investors, new to the trading markets. The platform allows users to trade starting with as little as a single dollar, and also makes funds available through the Robinhood Gold Card or the Crypto Wallet. All of this feeds into Robinhood’s self-described mission of democratizing finance for everyone. Some numbers show the company’s progress in this direction: it has 24 million funded customers as of April 30, and claims $123 billion in assets under custody.

The popularity of Robinhood’s app, and its popularity as a crypto trading platform, is reflected in the company’s stock performance; over the past 12 months, the stock is up ~111%. The stock has posted these gains despite choppy trading and some losing sessions in recent weeks.

Turning to the company’s financial results, we find that the 1Q24 report, the most recent, shows several record-level figures. Quarterly revenue came in at $618 million, up 40% year-over-year to a company record. The bottom line was another record, with the GAAP EPS reported at 18 cents per share. The revenues were $63 million above the forecast, and the EPS beat by 12 cents per share. These figures were bolstered by record net deposits of $11.2 billion.

Record-setting performance and strong y/y growth got JMP’s Devin Ryan to take notice of Robinhood, and to take a more bullish stance than the Street generally.

“We believe Robinhood can continue to deliver stronger-than-appreciated growth and stronger-than-appreciated profitability, all supportive of the valuation… With top-line growth reaccelerating, coupled with management’s expense focus, we estimate the company should be able to deliver average earnings growth of 30% + in the coming years, with significant runway before the business model reaches a more ‘mature’ state. At the same time, Robinhood’s financial stability has never been in a better place, with cash & investments over $5B, approximately a third of the entire market cap,” Ryan opined.

At his own bottom line, Ryan says, “Based on our growth projections as we look out over the next few years, we see the valuation as quite compelling…”

Quantifying his bullish stance, Ryan places an Outperform (i.e. Buy) rating on HOOD shares, and he sets a $30 price target that suggests a ~68% share gain over the coming year.

That’s the bullish position. The broader view from the Street puts a Hold on HOOD, based on 16 reviews that include 4 to Buy, 8 to Hold, and 4 to Sell. Shares in Robinhood are selling for $17.90, and the stock’s average price target of $20.14 implies a 12-month upside of 12.5%. (See Robinhood stock forecast)

To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a tool that unites all of TipRanks’ equity insights.

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.


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