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Bitcoin’s latest tumble might need brought on a rise in buying and selling quantity for Coinbase.
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Bitcoin’s
end-of-year slide pulled
Coinbase
down with it. The pessimism may be misplaced, one analyst claims.
Bitcoin fell 31% from its Nov. 8 excessive by way of the top of 2021, and that drop was painful for Coinbase, which fell 29% over the identical interval. The concern is that as Bitcoin and different cryptocurrencies fall, traders will lose interest, hurting the enterprise of crypto exchanges.
These issues are misplaced in keeping with Oppenheimer analyst Owen Lau. Whereas the drop in Bitcoin was painful, it didn’t drive traders away from cryptocurrencies. As a substitute, the decline brought on traders to commerce extra. Lau estimates that buying and selling quantity hit a report $540 billion in the course of the fourth quarter, 10% increased than his earlier estimate for $489 billion and 17% increased than the Wall Road consensus. In consequence, he raised his fourth-quarter gross sales forecast to $2.1 billion, up from $1.9 billion. Lau additionally notes that Coinbase now trades at simply 7.3 occasions 2022 gross sales estimates, effectively beneath 19.8 for “comparable high-growth fintech shares.”
No surprise, then, that Lau predicts good issues for Coinbase inventory going forward. “We imagine the basics of COIN, whose year-end 2021 buying and selling volumeis estimated to achieve a report excessive,” he writes. The Road seems to underestimate COIN’s earnings energy, and we see 13% upside to income consensus. We discover COIN attractively valued and suppose the dislocation presents a sexy entry level for traders.”
Lau has an Outperform score on Coinbase, with a $444 value goal. The inventory has gained 0.4% to $253.49 on Monday morning. Bitcoin has dipped 0.1% to $46,981.
Write to Ben Levisohn at ben.levisohn@barrons.com
