Some experts believe the exchange will comfortably surpass revenue estimates given by analysts because of the volatility seen in the second half of the third quarter.
Dramatic levels of volatility in the crypto markets may have contributed to a box office quarter for Coinbase, according to analysts.
The exchange is expected to release results for Q3, covering the period from July to September, next month.
While Bitcoin’s price rallied from $35,000 to $52,800 from July 1 to Sept. 7, the final few weeks of this three-month period were turbulent. Regulatory concerns and a Chinese property developer’s debt woes saw BTC tumble to $40,000 before slowly climbing back.
Generally speaking, volatility in the crypto markets is a good thing for platforms like Coinbase. Irrespective of whether prices go up or down, the spike in trades that such movements cause ends up generating healthy transaction fees — and right now, they form the lion’s share of the company’s revenue.
Owen Lau, an analyst at Oppenheimer, believes Coinbase will surpass revenue expectations — and argues that the stock may be hugely undervalued.
COIN closed Wednesday’s trading session at $250.38, barely offering any improvement on the reference price of $250 that was set at the time of the company’s IPO in April.
However, Lau believes the stock has the potential to outperform in the next 12 months — setting a target of $444. That would be an increase of 77.6% from current levels.
Generally speaking, analysts appear to be pretty bullish when it comes to Coinbase stock.
According to CNN Business, the median forecast for COIN between now and October 2022 stands at $337 — that would involve an increase of 34.6% from current prices. The high-end projection suggests the stock could surge 196.8% to $743, while the most bearish forecast only anticipates a 12.1% slide to $220.
Overall, 15 analysts rate Coinbase stock a buy, two believe it will outperform the market, seven have a hold rating, and one recommends selling up.
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Brian Armstrong Speaks Out
All of this comes as Brian Armstrong, the exchange’s CEO, expressed concern that “America could be losing some of its best talent” because of the attacks that executives receive from politicians and the media.
He made his remarks after a whistleblower made damning allegations about Facebook at a congressional hearing — with a number of lawmakers criticizing Mark Zuckerberg for choosing to go sailing rather than answer their questions.
Pointing to Microsoft’s Bill Gates, Google’s Larry Page and Amazon’s Jeff Bezos as just some of the famous CEOs who may have left because of this, he warned the figureheads of popular companies end up getting targeted as their businesses become more successful. He tweeted:
“Of course, every company deserves to have scrutiny and should take an honest look at what it's doing well and not well, but the market solves a lot of this for us. People vote with their wallet, choosing what to buy.”
