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Coinbase Stock: Why Analysts Are Feeling Bullish

COIN shares are seeing a sell-off from their early November peaks, but analysts expect upside ahead. Here's why Wall Street believes Coinbase stock may be a good deal at its current levels.

Coinbase  (COIN)  is the largest cryptocurrency exchange platform in the U.S. by trading volume. But since going public back in April, COIN shares have been quite volatile.

It would seem that Coinbase is very sensitive to cryptocurrency price trends. Coinbase has swung from a 52-week high of $429 to a 52-week low of $208. Currently, shares are nearly 30% lower than their initial price.

Still, the Wall Street consensus is strongly bullish as analysts forecast huge upside for COIN in 2022.

Figure 1: Coinbase on NYSE.

Figure 1: Coinbase on NYSE.

Here's what the experts are saying about Coinbase's stock.

Consensus Suggests a Strong Buy

Currently, the Wall Street consensus on Coinbase stock is very bullish. It's got a strong Buy rating with an average $398 price target. That represents a potential upside of more than 63% from current levels.

Figure 2: Analyst consensus rating on COIN.

Figure 2: Analyst consensus rating on COIN.

The Bull Case: $600 Price Target

MoffettNathanson analyst Lisa Ellis is currently Coinbase's biggest bull. She's set a $600 target on the stock. That suggests a whopping 146% upside from current levels.

When the company went public, the analyst called COIN a “must own” stock. Her bull case was based on Coinbase being a leading tech company that builds the infrastructure to make cryptocurrencies usable by a broader developer ecosystem. Her $600 price target was based on a 2023 revenue multiple.

A month ago, the analyst reinforced her bullish price target on the stock, mentioning the company's big NFT marketplace news, its recent partnerships with Meta  (FB) - Get Meta Platforms Inc. Class A Report and the NBA, the implications of the ProShares Bitcoin ETF, and the ongoing dialog between Coinbase and the U.S. Securities and Exchange Commission about cryptocurrencies.

Lastly, she sees a positive outlook for the entire crypto ecosystem and believes that the current decline in digital assets will last much shorter than in declines we saw in 2017 and 2018.

The Bear Case: $160 Price Target

On the bearish side, a couple of months ago, Autonomous Research analyst Christian Bolu initiated coverage of COIN with a Sell recommendation and a $160 price target for the next 12 months. That implies a 35% downgrade from current levels.

The analyst was concerned about what he saw as Coinbase lagging in cryptocurrency innovation and losing market share to competitors like Robinhood  (HOOD) - Get Robinhood Markets, Inc. Class A Report, FTX, and -- especially -- Binance.

Bolu wrote that, if Coinbase continues to lag behind, it could end up being left behind just as Netscape did during the early internet era.

Lastly, he justified his bearish price target based on the stock trading at 7 times 2023 gross profit. This is discounted to traditional exchanges, where lower growth and higher revenue volatility are projected.

(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting the Wall Street Memes)