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Analysts project 32% upside for Coinbase stock despite crypto market volatility

Analysts project 32% upside for Coinbase stock despite crypto market volatility

Coinbase (NASDAQ: COIN) is set to announce its 2021 Q2 results by close of trading on Tuesday, with investors monitoring the exchange’s performance for the quarter marked by high cryptocurrency market volatility. 

According to consensus data by Bloomberg, the exchange is projected to record $1.85 billion in revenue, while adjusted earnings per share are expected to be $2.48. 

Worth noting is that, the recent volatility in the crypto market appears to have significantly impacted the Coinbase shares that have fluctuated since going public in April. For the better of the quarter, the shares have traded below the April opening day price of $381. Ahead of the release of the result, the shares are trading below the $300 mark. 

Coinbase stock price history.

Like other companies in the crypto sector, Coinbase progress slowed by the drop in Bitcoin price. Notably, when Coinbase was listed, the price of Bitcoin hit an all-time high of $64,800. 

However, increased regulatory crackdown from jurisdictions like China and mounting concerns about Bitcoin’s mining carbon footprint saw the asset plunged by almost 50% from the record price. At the same time, second-ranked crypto Ethereum also suffered a significant price correction. 

Considering that Bitcoin and Ethereum play a significant role in Coinbase revenue, it will be interesting to learn how the volatility impacted the exchange’s revenue. During Q1 2021, Coinbase indicated that Bitcoin and Ethereum accounted for 39% and 21% of its trading volumes, respectively. With the price price drop, interest in cryptocurrencies plunged alongside the volume. 

However, despite the vulnerable position of Coinbase, analysts expect the exchange to record a trading volume of $377.4 billion, a growth from $335 billion in the previous quarter.

Analysts project bullish future for COIN stock

Despite the regulatory uncertainty and volatility, Wall Street analysts are projecting a bullish outlook for the Coinbase stock. 

In the next 12 months, 14 Wall Street analysts expect Coinbase to gain by at least 32.11% with an average price target of $357.67. Consequently, 11 of the analysts believe Coinbase stock is worth buying.  

Coinbase stock analysis. Tip Rank

To attain this goal, Coinbase Q2 earnings remain strategic for the stock’s growth. 

According to credit services firm Blue Line Capital founder and President Bill Baruch, the earnings will surpass expectations despite the crypto volatility. 

“I think their user growth is going to exceed verified users of 60 million, and I think that’s going to be sort of a benchmark that they’re going to continue to feed on. I think that’s going to pick up” even if major crypto assets such as bitcoin or ethereum struggle,” said Baruch.

Impact of regulatory crackdown

On the flip side, the regulatory landscape will play a key role in Coinbase prospects. For a business that relies on trading fees, a regulatory crackdown might derail Coinbase’s stock. 

In the U.S., regulators have remained skeptical about cryptocurrencies. For instance, officials from the Securities Exchange Commission are stating that some cryptocurrency trading exchanges offer illicit, unregistered securities. 

As a sign of relief, the proposal to increase additional crypto oversight for the crypto sector flopped in the U.S. senate on Monday.

At the same time, Coinbase is positioning itself as a market leader, through various acquisitions. Recently, Coinbase acquired Dallas-based digital assets data aggregator firm Zabo at an undisclosed fee.


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