Bitcoin prices crashed but Coinbase stock doesn’t deserve criticism: analyst

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It’s time to save the truck and buy the battered shares of pioneer crypto exchange Coinbase (COIN), argues Oppenheimer analyst Owen Lau.

Coinbase shares don’t deserve to be washed away in the last crypto winter, according to Lau.

“We believe that Coinbase should not trade in parallel with bitcoin because bitcoin can be very volatile, but at the same time, due to its volatility, it results in a higher volume of transactions. It is similar to all exchanges. traditional, and we think it’s still a misconception in the market that people think Coinbase should trade bitcoin in the future, ”Lau said on Yahoo Finance Live moments after posting a bullish research note on the society.

Lau reiterated his outperformance rating on Coinbase along with a 12-18 month price target of $ 440. Indeed, Lau is looking for Coinbase shares to almost double within 18 months.

Here are the key aspects of Lau’s appeal:

Volumes stronger than expected in the second quarter.

Wall Street analysts will likely be forced to increase their estimates for 2021 in light of a strong second quarter for volumes.

Concerns about Coinbase cutting its fees are overblown and will go away.

That being said, Coinbase shares have been dragged into the downward trend in crypto prices that has been going on for months already.

Compared to highs of over $ 63,000 in mid-April, bitcoin (BTC-USD) has lost around 50% (including a trip below the $ 30,000 level). The massive sales spilled over to other top cryptos such as dogecoin and ethereum amid fears of a crackdown from regulators in the United States and China.

Coinbase shares have fallen about 30% in the past three months. At $ 234.88, Coinbase shares are trading well below the level of $ 328.88 set when it debuted on the Nasdaq in mid-April.

Coinbase employee Daniel Huynh holds a celebratory champagne bottle as he photographs outside the Nasdaq MarketSite in Times Square in New York City on Wednesday, April 14, 2021. Wall Street will focus on Coinbase on Wednesday, the digital currency exchange becoming a publicly traded company. (AP Photo / Richard Drew)

The pullback comes despite Coinbase CFO Alesia Haas reiterating in an interview on Yahoo Finance Live that the second quarter has started well.

Lau said in his memo, “Looking ahead, we believe management will continue to strategically increase contributions from 1) recurring revenue (eg, Coinbase Earn campaign, staking, and mergers and acquisitions) and 2) altcoins. Coinbase reported about 40% of its trading volume in the first quarter was from altcoins, significantly lower than its peers (eg, ~ 85% of spread revenue for Voyager). After adding Dogecoin, Polkadot and others, Coinbase is expected to gradually reduce its reliance on Bitcoin. We continue to see a strong dislocation between Coinbase’s fundamentals and its valuation and I think the current price offers an attractive entry point for long-term investors. “

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Brian Sozzi is editor and presenter at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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