Coinbase Rally Leaves Analysts Divided on the Crypto Exchange

Analysts don’t quite know what to make of Coinbase Global Inc.’s valuation.

The stock has jumped almost 80% since mid-June, buoyed by BlackRock Inc.’s application to launch a Bitcoin exchange-traded fund and Ripple Labs Inc.’s partial court win against the Securities and Exchange Commission a month later. That’s left some analysts ratcheting up price targets for the crypto exchange, while others say the stock has decoupled from reality. There’s a 75% gap between the highest and lowest price targets issued since the Ripple ruling.

Amid the divergence, much rides on Chief Executive Officer Brian Armstrong’s ability to reassure investors about Coinbase’s growth prospects when it reports second-quarter earnings on Thursday after the market close.

Stock bears like Berenberg’s Mark Palmer said the stream of good news that lifted Coinbase doesn’t have any bearing on its growth outlook, which has been hurt by the SEC’s clampdown on the company and the wider sector. In response to the bleak US environment, Armstrong is embarking on an overseas expansion.

“We are surprised that the market was as exuberant as it was, simply because the company continues to face very significant risks on the regulatory front,” said Palmer, a senior research analyst at Berenberg. He rates the stock a “hold” and calls it “uninvestable in the near term.” His price target is $39, compared with Wednesday’s close of $90.43.

Analysts don’t expect Armstrong’s overseas push to meaningfully alleviate pressure on revenue at least through next year, estimates compiled by Bloomberg indicate. Since Bloomberg News first reported in March about plans to potentially set up a new crypto-trading platform overseas, consensus estimates for 2024 revenue have kept drifting lower as the SEC sued Coinbase.

No Reprieve