The price of Bitcoin (CRYPTO: BTC) has gone through the roof in recent sessions, and cryptocurrency exchange Coinbase Global, Inc. (NASDAQ:COIN) is one stock that remains poised to capitalize on Bitcoin’s strength, according to an analyst at Mizuho Securities.
The Coinbase Analyst: Dan Dolev maintained a Neutral rating on Coinbase and upped the price target from $220 to $300.
The Coinbase Takeaways: Bitcoin prices are on a tear and volatility has increased as well, analyst Dolev said in a note.
Coinbase’s share losses in Bitcoin persisted through the third quarter, dropping from 1.8% in the first quarter to 1.6% in the third quarter, the analyst noted.
The company appears to have stemmed the fall at the beginning of the fourth quarter, Dolev said. Early data from October-to-date shows that Coinbase’s market share in Bitcoin has been on the rise, he added.
Coinbase the analyst said, remains very levered to fluctuations in Bitcoin prices. Mizuho’s quarterly build suggests about 10% potential upside to third-quarter consensus revenues estimates, assuming no steep declines in take rates relative to the second quarter, he said.
That said, over the medium term, Coinbase’s average revenue per user and margin will both likely stay under pressure, Dolev said.
Over time, the exchange’s fees may face downward pressure from competing platforms following the footsteps of zero-commission stock trading, the analyst said.
As opposed to PayPal Holdings, Inc. (NASDAQ:PYPL) and Square, Inc. (NYSE:SQ)’s Cash App, which primarily uses crypto trading products as engagement tools, Coinbase relies on commissions for the vast majority of its revenue, he added.
COIN Price Action: At last check, Coinbase shares were falling by 4.18% to $301.55.