- According to data compiled by Bloomberg, Coinbase was recommended a “buy” by no less than 22 analysts, while 5 gave it a “hold” and only 4 recommended a “sell.”
- In many ways, a bet on Coinbase is a bet on the longevity of the cryptocurrency industry and to that end, there are still plenty of reasons to be optimistic.
With shares of America’s only listed cryptocurrency exchange Coinbase Global (+16.02%), down 77% so far this year, and unfounded rumors being spread about its bankruptcy, it may seem peculiar that Wall Street is still bullish on the firm’s prospect.
Even as shares of Coinbase plummeted, Cathie Wood’s Ark Investment Management picked up more and WIT, an investment firm that manages money for the world’s richest family the Waltons, bought stock in the cryptocurrency exchange as well.
Coinbase entered the public markets through a direct listing at a price of US$250 and closed on its first day of trading at US$328.28 last April.
It currently trades at just US$67.87, or around 80% off its all-time-high, yet analysts are still broadly recommending the stock, despite its weaker-than-expected first quarter earnings report.
According to data compiled by Bloomberg, Coinbase was recommended a “buy” by no less than 22 analysts, while 5 gave it a “hold” and only 4 recommended a “sell.”
That overwhelming stamp of approval by Wall Street analysts is all the more surprising especially considering that cryptocurrency markets have lurched from one crisis to the next, as policy tightening saw prices tumble and now with the TerraUSD algo stablecoin collapse.
Speaking with Bloomberg, Mark Palmer, a fintech analyst at BTIG, who set a target price for Coinbase at US$380 suggests,
“The extent of that decline is vastly overblown and stems, in large part, from a lack of understanding among many retail investors of how well capitalized Coinbase is.”
And that may make all the difference.
In the early days of cryptocurrencies, there were at one point more exchanges than there were tokens to list.
Even today, there are far too many exchanges, which makes for plenty of price inefficiencies and arbitrage opportunities.
As the cryptocurrency markets enter what could be a fresh Crypto Winter, consolidation or collapse amongst lesser exchanges could see the rise of a handful of dominant ones, that come to represent the global market, a huge opportunity for Coinbase.
Investors may be looking at Coinbase’s shares now and worried that the price could fall further, but imagine if one day, Coinbase becomes the equivalent of the New York Stock Exchange or even Nasdaq, what would its value be then?
In many ways, a bet on Coinbase is a bet on the longevity of the cryptocurrency industry and to that end, there are still plenty of reasons to be optimistic.
While the collapse of algo stablecoin TerraUSD has been bad for the market in general, it hasn’t resulted in the sort of systemic failure that Lehman Brothers wrought on the global financial system.
Decentralization may have worked and to that end, Wall Street might be betting on something that Main Street doesn’t yet fully understand.