Coinbase Stock Forecast: Will COIN Stock Reach $100?

Coinbase Stock Forecast: COIN stock is technically bullish. The 12-month price target for Coinbase stock is $92.6.

It has been a very good year for the cryptocurrency exchange Coinbase. The stock is up by almost 92% (as of 6.03.2023) this year, clearly outperforming the indices with S&P 500 only up by 5.79% and Nasdaq 100 index up by only 13.15%. Coinbase stock price is a reflection of the well-being of the crypto market. It is indeed a good year for cryptocurrency as bellwether Bitcoin is up by 35% year to date. 

The big question is, whether the year-start rally will sustain in Coinbase or it will turn into another FTX in due course of time. What are the positives and negatives for Coinbase as a company and as a stock? Let’s find out.

Coinbase Performance

  • Last 1 month: +4.7%
  • Last 6 months: +2.5%
  • Last 12 months: -64.7%

Coinbase Stock Forecast: 12-Month Target

Average Price Target$92.6
Tiger Securities$200
TD Cowen$36

Coinbase Stock Forecast: Bull Case

Trading picks up in the cryptocurrency market- The path of Coinbase stock is dependent on the cryptocurrency that trades through its platform. Now last year has been a forgetful year for the crypto market, with prices of bitcoin almost down by about 60% in 2022 which caused a pullback in trading activity. Overall trading volumes collapsed 74% to $145 billion in Q4 2022 as compared to the previous year. Moreover, the monthly transacting users declined to 8.3 million from 11.4 million in a year.

But things are slowly turning upside down for Coinbase. With the crypto market being up, Coinbase has also seen a bit of an uptick in retail participation and trading volume. In January 2023, it saw a total transaction volume of $120 million as compared to $322 million in the whole of Q4 2022. Moreover, through the downturn market in 2022, several players filed for bankruptcy, and FTX, a rival exchange for Coinbase also collapsed in November 2022. This might help Coinbase to capture the market share and be a more established and well-capitalized player.

Becoming a better-regulated exchange- There are only two fears in investors’ minds regarding cryptocurrencies, first the underlying value of the asset, and second, it is one of the least regulated asset classes available to invest for the general public.

The Coinbase year 2023 started on a good note on the regulation front with a federal judge throwing a class action suit against Coinbase for selling unregistered securities and not registering itself as a broker-dealer. The judge passed the ruling that exchange Coinbase had no role in the transactions and closed the case.

There is news coming up with the Securities and Exchange Commission (SEC) charging Payward Ventures and Payward Trading, running the Kraken crypto exchange for not registering their staking as a service program. Although Coinbase share price also fell 14% on the news, management has made it clear that their staking services are not securities. Coinbase staking products like USD Coin (USDC) is not a security.

The clarifications made the analysts like Well Fargo, and Barclays raise the target price for Coinbase. More regulations will come into the crypto space in the year 2023 and Coinbase is expected to be on the right side of it.

Coinbase Stock Forecast: Bear Case

Disappointing results and flawed presentation- Coinbase did a strange thing in its letter to shareholders during the Q4 results announced on Feb 24th, 2023. At face value, the results are disappointing which raises a red flag about the company, but the greater concern is the style of presentation to make the picture looks rosy and that is a much bigger concern as an investor.

Revenue declined more than 50% for the year to $3.15 billion as compared to $7.84 billion in the year 2021. Moreover, the net income has been down in the negative territory to $2.62 billion as compared to a positive income of $3.10 billion in the year 2021. The net revenue in Q4 2022 is down by 75% YoY to $605 million and the net income came at negative $557 million as compared to $840 million in the same quarter a year ago. Almost everything except interest income was down dramatically. Blockchain rewards were down 39%, custodial fee revenue plunged 77% and subscription and service revenue dropped 48%. The only surge in interest income was due to higher interest rates.

But the company has tried to present a rosy picture to investors in shareholders’ letters. The company included a chart of its reported subscription and service revenue and right next to it, it shows a chart of this revenue adjusted to remove all volatility in crypto assets

image 222
*Source Coinbase

As most of Coinbase’s revenue is sensitive to crypto prices, and given the decline last year, the fall in the revenue is not surprising. But assuming the crypto prices were always at Q4 2022, the company’s service revenue more than tripled as per the above figure.

The chart attempts to capture the demand for services independent of the crypto prices. But there is a big problem here, if prices were to remain constant with very less volatility, the company’s core business would not exist. Customers pay transaction fees as they think that the chances of making big profits are high and that requires volatility.

In a way, the company is saying that if crypto prices were to remain stable, their business would be booming, but please ignore the impact of such an environment on core business. Falling revenue is a concern, but its flawed presentation is a bigger concern. 

Great exposure to retail investors- COIN stock is down by about 82% from its all-time high of $343 in November 2021. Coinbase CEO Brian Armstrong’s also warned about “crypto winter “last June. As one of the largest cryptocurrency exchanges in the world, Coinbase generates 95% of its revenue from retail investors and only 5% from institutional investors.

Coinbase high exposure to retail investors enabled it to capture the extraordinary bull run in the crypto market in the year 2020 and 2021. As Bitcoin and Ether rallied to an all-time high of $68,000 and $4,800 respectively. But that exposure backfired in the year 2022 as rising interest rates caused investors to sell the cryptocurrencies. Today, the bitcoin price has plummeted to $22,460, and jaded investors have stopped trading cryptocurrency frequently.

This exposure to retail investors makes the Coinbase stock price sync with the crypto prices and that is not a great thing for an investor.

Coinbase Stock Forecast Today

GMT: 01 Jun, 2023 05:40 PM
Overall OutlookBullish
1. Market's WisdomBullish
1a. Market DataPartially Bullish
1b. Technical RecommendationBuy
2. Crowd's WisdomPartially Bullish
2a. Social Media BuzzHigher
2b. Social Media SentimentNeutral

Conclusion: Is COIN stock a buy now?

It was a steep fall in the share price for COIN stock in the year 2022. But things are changing in 2023. Investors have also ignored the bad results of Q4 2022 and focused more on the guidance given by the management for the upcoming quarters.

The company has painted a rosy picture in the recent results, but that will not last long if the numbers do not turn up in their favor in upcoming results. COIN stock can prove to be a great investment at the current levels if an investor is positive about the cryptocurrency future, especially Bitcoin but does not believe in it as an asset class.

Note: Crowdwisdom360 collates Predictions and data from all over the net and has no in-house view on the likely trends in the Index or Individual Stocks. Please consult a registered investment advisor to guide you on your financial decisions. 

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