The wider tech market has suffered huge losses over the past few months, and Coinbase has been no different. Coinbase Stock (NASDAQ:COIN) is currently trading 9% lower for the month and 33% lower for the half year. This earnings season has also been unforgiving, with big techs taking the brunt of the bears wrath. Coinbase Stock has been sliding in the days leading up to its earnings release, set for Thursday 24th.
However, it may not be all bad news for investors. Today, JPMorgan analyst Kenneth Worthington kept an overweight rating on the stock with a lowered $345 price target. Ahead of the Q4 report, Worthington raised their estimates on “better than previously modelled trading volume yielding increased commissions and transactions fees.”
Here’s the breakdown on why JP Morgan maintain bullish on Coinbase Stock despite lowered crypto prices and investor confidence.
JP Morgan Remains Upbeat on Coinbase Stock
Worthington noted to investors that Coinbase’s staking revenue will continue to rise in Q4. Staking is a way customers can earn rewards for holding certain crypto assets such as Ethereum which requires technical knowledge and a dedicated computer that can perform validations day or night without downtime.
Worthington sees increased staking growth as a reflection of the sophistication of Coinbase’s customers. Ultimately, Coinbase is attracting more technical crypto investors which is driving further staking revenues.
However, with lowered crypto prices the analyst has reduced trading volumes from $1.7 Trillion to $1.6 Trillion in 2022.
“While we continue to expect greater development and utilization of the blockchain and FY cryptocurrency technology, we see the lower prices as weighing on Coinbase value traded and thus weighing on revenue and earnings. We are modeling $1.6tr of trading volume in 2022 vs. our prior projection of $1.7tr,” added Worthington.
Can Coinbase Stock Bounce Back in 2022?
Overall, the downtrend in Coinbase stock is both due to crypto market conditions and the wider lack of investor confidence in US tech equity. Worthington sees Coinbase stock hitting $345 which implies an upside of 100%.
However, Coinbase has continually traded below Wallstreet’s valuations since its inception. Why is this? Coinbase stock offers a unique exposure to cryptocurrency, in the sense that the market performance of crypto currency both directly and indirectly impacts the companies bottom line. It may be that investors are staying weary of the crypto market for now.
How do you see Coinbase Stock playing out in 2022? Let us know in the comment section below.
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The content above is strictly for informational purposes only and is not financial advice nor does it constitute a recommendation. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.