Coinbase shares (NASDAQ:COIN) are benefitting from the crypto craze we have recently seen. They are currently below the IPO price, released on 14th April 2021, of $381. They hit a high on the release day to nearly $430. Is this next crypto bull run set to send Coinbase back to that price range?
Coinbase is one of the most popular platforms to trade crypto. The success of Bitcoin and Ethereum seen at the start of this year helped Coinbase open on the market with a market valuation of $85.8B. They have over 68 million users on the site and they make revenue through transaction fees.
The IPO was choppy as prices saw a high of $429.54 and a low of $310, as investors found an agreement for the valuation. Since the IPO, Coinbase shares hit a low of $208 and now is priced at $278.44.
Earnings that were released on 10th August were good. The estimate was $2.32 per share, but the results came out as a surprise at $6.42, a 176% increase. The revenue stood at $2.03B, which was a 1,040% rise from the same quarter the year before.
What do I anticipate for the next earnings? They will be due in November for Q3 results. This quarter will include the current interest that crypto has. More people creating accounts to buy crypto means more transaction fees to boost revenue for Coinbase.
What does Coinbase have above the others?
Coinbase has, in my opinion, the most user friendly interface. It reminds me of using PayPal. It’s very straightforward. This is the key factor in its popularity, especially as many newcomers to crypto may get lost on other sites.
Coinbase is always adding coins to its platform. It currently has more than 80 assets available to trade. As this grows, more interest will be received from the crypto enthusiasts who love researching and trading small crypto products, which often see volatile price changes.
A point to note is that 26% of trading volume is seen from Ethereum (ETH), 24% from Bitcoin and the other 50% from alt coins.
What do I think is in store?
I believe in the next months, whilst crypto is gaining price and attention, we will continue to see the Coinbase price grow alongside this. Reaching previous highs by the end of this year would not be unreasonable.
The price is starting to curl off the level of support at $210. I have $294-$300 as short term targets for the share price to reach. Longer term targets are highs of $430.
Risks to the stock relate to crypto sentiment. Right now, it is bullish. But if crypto was to come under more scrutiny from governments, namely China again or the US, crypto would sell off. That would cause the same thing for Coinbase, which is heavily valued on the price of the assets they own and sell.