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September 01, 2020 1:32pm
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Coinbase stock and the case for 50% upside

coinbase logo on blue background simulating a gold bar

Coinbase Global, Inc. (NASDAQ: COIN) is one of those stocks you just can't keep your eyes off. Whether it's ripping higher or collapsing onto itself, you're guaranteed entertainment. One thing's for sure: investing in one of the world's biggest cryptocurrency exchanges isn't for the faint of heart. 

In less than two years, the stock went from IPO'ing above $400 to trading for less than $40 a share. Since tagging a low at the start of last year, however, Coinbase shares have been doing what they loved best: rallying. The stock has rallied as much as 500% in that timeframe, with its fair share of eye-watering pullbacks along the way, and all told, it is currently up around 300% in the past twelve months. 

The current state of play

Over the past few weeks, shares have been consolidating, having softened in the first few weeks of January. However, a 7% jump in yesterday's session belied the built-up momentum they still hold inside, and there are some strong reasons to think there's a lot more where that came from. 

On January 26, 2024, we saw the team at Oppenheimer upgrade their rating on Coinbase stock from Perform to Outperform. They also gave the stock a fresh price target of $160. Even including yesterday's jump, that points to a further upside of at least 20%. The Oppenheimer team is particularly bullish on the company's prospects when it comes to grabbing market share, noting that "while many peers went under, Coinbase is still standing and fighting for its businesses and the industry." This is all the more relevant considering the renaissance that cryptocurrencies are currently undergoing. 

For better or for worse, Coinbase and crypto-related stocks like it tend to go up and down in tandem with the broader sentiment toward the underlying cryptocurrencies. To paraphrase an old saying, when Bitcoin sneezes, Coinbase catches a cold. It's no coincidence that Coinbase's plummet coincided with Bitcoin's 80% crash. In a similar vein, it's also not a coincidence that Coinbase is now back in favor right as Bitcoin surges to 52-week highs. 

For those of us on the sidelines and considering getting involved, be it as a way to gain short-term exposure to the bullish sentiment sweeping crypto right now or to build a long-term position, the results from the ongoing SEC lawsuit will have a massive effect on the stock's direction. Oppenheimer's upgrade was made on the premise that Coinbase would either win the case or see it dismissed. Assuming one of these two eventualities comes to pass, the outlook is exceedingly bright. 

Getting involved 

Coinbase is trending towards hitting positive GAAP EPS in the coming quarters and has a management team that is "tougher than most investors think," according to Oppenheimer. And the best part? They're far from alone in their bullish outlook and high expectations. Citigroup and Wedbush have already boosted their price target on Coinbase stock this year, with JMP Securities going so far as to give it a $200 price target just before the holidays. Needless to say, from current levels, that's pointing towards a further upside of 50%, which should be more than enough to tempt most investors with at least some appetite for risk.

Were Coinbase shares able to hit that level in the coming months, they'd have set a new high above December's peak and, in doing so, would have confirmed that the current uptrend is very much intact. The company is due to release its next earnings report in two weeks, and that will tell investors a lot about the stock's ability to meet and exceed these loft expectations. 

Look for growth in both revenue and earnings, with a positive print on the latter, which is likely to be the main metric investors are watching for. With such positive momentum behind Coinbase shares right now, it's hard to bet against them and even harder to sit on the sidelines. 

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