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."
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free 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
-
Small Businesses Are Racing to Use AIThe Kiplinger Letter Spurred on by competitive pressures, small businesses are racing to adopt AI. A recent snapshot shows the technology’s day-to-day uses.
-
The Me-First Rule of Retirement SpendingFollow the 'Me-First" rule and you won't have to worry about running out of money when the stock market goes south.
-
I'm a Financial Planner: Could Partial Retirement Be the Right Move for You?Many Americans close to retirement are questioning whether they should take the full leap into retirement or continue to work part-time.
-
From Mortgages to Taxes to Estates: How to Prepare for Falling Interest RatesAs speculation grows that the Federal Reserve will soon start lowering interest rates, now is a good time to review your financial plans for housing, estate, taxes, investing and retirement to make the most of potential changes.
-
This Is How Lottery Winners Build Lasting Legacies, From a Financial ProfessionalWinning a massive lottery jackpot, like the recent $1.4 billion Powerball, requires seeking immediate legal and financial counsel, protecting your identity and winnings and planning your legacy.
-
S&P 500 Slips Ahead of Fed Week: Stock Market TodayAll eyes are on the Federal Reserve ahead of next week's critical policy meeting.
-
September Fed Meeting: Live Updates and CommentaryThe September Fed meeting is a key economic event, with Wall Street keyed into what Fed Chair Powell & Co. will do about interest rates.
-
I'm an Investment Strategist: This Is How the Fed's Next Rate Move Could Impact Your WalletInterest rate cuts might be coming, which could affect everything from your credit card debt to your mortgage. It's smart to prepare now — here's how.
-
I'm a Retirement Planner: These Are Three Common Tax Mistakes You Could Be Making With Your InvestmentsDon't pay more tax on your investments than you need to. You can keep more money in your pocket (or for retirement) by avoiding these three common mistakes.
-
Want to Shave 10 Hours Off Your Workweek? A Startup Expert Shows How AI Can HelpArtificial intelligence is overhauling how companies operate, freeing up entrepreneurs and their workers to skip the menial stuff and get down to business.
