Coinbase Global (COIN) stock is spiraling Monday, hit by a sharp selloff in cryptocurrencies, including drops of more than 14% for bitcoin and 18% for ethereum at last check.
Coinbase's stock tends to sell off when cryptocurrencies like bitcoin and ethereum lose value, because, as a marketplace, its revenue is closely tied to the trading volumes of these digital assets.
"Crypto asset price risk could adversely affect our operating results," stated Coinbase in its latest quarterly filing with the Securities and Exchange Commission (SEC). "In particular, our future profitability may depend upon the market price of bitcoin and ethereum, as well as other crypto assets."
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
When there is a sharp drop in cryptocurrencies, trading volume typically declines, which means Coinbase sees a decline in transaction fees during these periods. Transaction fees are Coinbase's largest source of revenue, equating to approximately 54% of its total revenue in the first half of 2024.
Coinbase also holds crypto assets, so lower values of these assets directly impacts the value of its holdings. As of June 30, the company's crypto assets consisted of $1.2 billion held for investment, $223.1 million that were borrowed, $84.2 million held for operations, and $21.1 million held as collateral.
Is Coinbase stock a buy, sell or hold?
Heading into today's trading, the financial stock had more than doubled on a year-over-year basis. Even with the recent slump, Wall Street remains bullish on the crypto exchange.
According to S&P Global Market Intelligence, the average analyst target price for COIN stock is $252.52, representing implied upside of more than 30% to current levels. Additionally, the consensus recommendation is a Buy.
Financial services firm Oppenheimer is one of the most bullish outfits on COIN stock with an Outperform rating (equivalent to a Buy) and $282 price target.
"We view COIN as an enabler of crypto innovation, which solves some pain points in the existing financial system, and one of a few remaining exchanges in this space," wrote Oppenheimer analyst Owen Lau in an August 1 note. Lau's bullish outlook on the stock is based on several things, including blockchain adoption, a strong balance sheet, and a "platform for product innovation, which produces a virtuous cycle for monetization."
The analyst adds that "as a leader in the cryptoeconomy, COIN is well positioned to benefit from the mass adoption of digital assets."
Oppenheimer's $282 price target sits roughly 50% above Coinbase Global's current price.
Related Content
-
Is It Time to Cut the Cord on Your Landline?With rising costs and evolving technology, many are rethinking their home phone service. Here's how to decide if it's time to let go.
-
Parents Prepare: Trump's Megabill Brings Three Crucial Tax ChangesTax Changes Are you a parent? The so-called ‘One Big Beautiful Bill’ (OBBB) impacts several key tax incentives that can affect your family this year and beyond.
-
June CPI Signals Tariff Impact: What the Experts SayThe June CPI report shows that inflation is accelerating, but at a pace that's in line with economists' expectations.
-
I'm a Financial Planner: Here Are Five Smart Moves for DIY InvestorsYou'll go further as a DIY investor with a solid game plan. Here are five tips to help you put together a strategy you can rely on over the years to come.
-
Neglecting Car Maintenance Could Cost You More Than a Repair, Especially in the SummerWorn, underinflated tires and other degraded car parts can fail in extreme heat, causing accidents. If your employer is ignoring needed repairs on company cars, there's something employees can do.
-
'Drivers License': A Wealth Strategist Helps Gen Z Hit the RoadFrom student loan debt to a changing job market, this generation has some potholes to navigate. But with those challenges come opportunities.
-
Stock Market Today: Markets Chop Up More Trump ThreatsStocks are grinding to new highs on light summer volume, and bitcoin is only getting bigger.
-
If You'd Put $1,000 Into Procter & Gamble Stock 20 Years Ago, Here's What You'd Have TodayProcter & Gamble stock is a dependable dividend grower, but a disappointing long-term holding.
-
Financial Pros Provide a Beginner's Guide to Building Wealth in 10 YearsBuilding wealth over 10 years requires understanding your current financial situation, budgeting effectively, eliminating high-interest debt and increasing both your income and financial literacy.
-
Five Mistakes to Avoid in Your First Year of RetirementRetirement brings the freedom to choose how to spend your money and time. But choices made in the initial rush of excitement could create problems in future.
