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Coinbase Global on Monday closed below its $250 reference price for the first time since the crypto platform listed on the Nasdaq Inc .
NDAQ,
exchange in mid-April.
Coinbase
COIN,
whose users primarily deal in bitcoin
BTCUSD,
and Ether
ETHUSD,
on the Ethereum protocol, last week reported strong first-quarter results, in line with its preliminary release before it went public but concerns about the volatility of its underlying digital-asset business are providing the stiffest headwinds for the platform, experts said.
Last week, Coinbase, headed by Chief Executive Brian Armstrong, reported $1.8 billion in revenue, compared with $191 million in the first quarter a year ago. It reported $771 million in net income, versus $32 million a year ago, and said that it planned on adding popular crypto dogecoin
DOGEUSD,
to its suite of offerings in two months after a surge in the “meme” asset has helped its rivals presumably grab some market share away from the U.S.’s largest crypto platform by volume.
The crypto company boasts a user base of 56 million, and 6.1 million of that base transact monthly. Coinbase is forecasting monthly transacting users of 5.5 million to 9.0 million for 2021, depending on the performance in the crypto market.
Coinbase is down around 30% since its public debut, in step with the decline of the broader crypto complex but a number of analysts remained bullish on the company’s stock.
Kyle Voigt, analyst at Keefe, Bruyette & Woods, who initiated coverage of Coinbase on May 3 at market perform with a price target of $325, said during a recent podcast hosted by the company that Coinbase has “a tremendous opportunity to better monetize its existing customer base,” pointing to staking as one possible near-term avenue for the company to grow revenues.
Staking refers to putting up virtual currencies and earning rewards of for that stake in the process of validating transactions on proof-of-stake, or POS, protocols. j
“We believe Ethereum staking alone will generate over $100 million in net revenues by 2023 (from $0 in 1Q21),” the KBW analysts speculated, noting that the Ethereum blockchain is moving from a proof-of-work protocol to a POS soon. Proof-of-work blockchains, like bitcoin, require tremendous amounts of energy, or computing power, generated to validate their digital ledger.
Shares of Coinbase fell 4% at $248.24 on Monday. By comparison, the Dow Jones Industrial Average
DJIA,
closed down 0.2%, the S&P 500 index
SPX,
declined 0.3% and the Nasdaq Composite Index
COMP,
finished the session 0.4% lower.
CFRA Research’s Chris Kuiper is maintaining the company’s “buy” recommendation for Coinbase, but last week cut the price target to $375 from $400.
“We maintain our Buy opinion as we concede COIN shares are still embedding very high expectations, but we think they can be exceeded given the trajectory of growth,” the CFRA analyst wrote.
