The “Everything Exchange.” That is what cryptocurrency exchange giant Coinbase (COIN) is out to be, by some reports, and there are those who think it can be a winning play. Not everyone is quite so convinced, however. Investors certainly seem a bit less sure, as measured by the fractional loss seen in Coinbase shares in Wednesday afternoon’s trading.
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Word from Deutsche Bank analyst Brian Bedell—who has a five-star rating on TipRanks—made it clear that Coinbase’s recent moves to expand its product line and trade in other cryptocurrencies could be a great move for the company overall. Bedell noted, “We see the company benefiting financially from the next stage of its evolution by leveraging its long-established solid market position within the crypto ecosystem into a much broader on-chain platform via a substantial build of a wide array of capabilities — within its ‘everything exchange’ strategy.”
The plan could, ultimately, open up more potential for earnings growth at Coinbase while also working to calm down volatility. This is reasonable enough; the more revenue streams Coinbase can access, the less likely it is to see one particular issue in revenue hamper the whole process.
“Cannibalization”
However, not everyone was so sure. Mizuho Securities offered up a research note about Coinbase, specifically about prediction markets. Users participated in a survey, and revealed that 50% of its retail brokerage customers planned to use fresh cash to fund prediction market wagers. Only 37% were planning to do so at the crypto exchange, meanwhile.
This in turn prompted concerns over “cannibalization” at Mizuho, who noted, “We remain cautious on the medium-term upside to sales from prediction markets given potential cannibalization from crypto sales.” Mizuho also kept its Neutral rating on Coinbase in place, though it pared back its price target from $320 per share to $280.
Is Coinbase a Buy, Sell or Hold?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on COIN stock based on 17 Buys, seven Holds and one Sell assigned in the past three months, as indicated by the graphic below. After a 9.74% loss in its share price over the past year, the average COIN price target of $391.30 per share implies 55.32% upside potential.
