Devin Ryan from Citizens JMP highlighted Coinbase’s impressive earnings, noting a 25% revenue beat and a 50% stock increase since the recent election, driven by a favorable regulatory environment and strong performance expectations. He expressed a bullish outlook on Coinbase’s future, emphasizing its diversification beyond cryptocurrency trading and a price target of $400, as it positions itself as a key infrastructure provider in the blockchain ecosystem.
In a recent discussion, Devin Ryan, head of financial technology research at Citizens JMP, shared his insights on Coinbase’s latest earnings results. Despite the stock’s modest movement in after-hours trading, Ryan emphasized that the quarter was impressive, with Coinbase beating revenue estimates by 25%. He noted that the stock had already risen 8% on the day of the announcement and has seen a significant increase of 50% since the recent election, indicating high expectations from investors.
Ryan highlighted the positive momentum that Coinbase is experiencing as it enters the first quarter of the upcoming year. He pointed out that the company’s performance in the first quarter is expected to mirror the strong results from the fourth quarter, suggesting a continuation of growth. Additionally, he mentioned the favorable regulatory environment for cryptocurrencies, with supportive policies emerging from the White House, Congress, and the SEC, which has contributed to the excitement surrounding Coinbase’s results.
The conversation also touched on the correlation between Coinbase’s stock performance and Bitcoin’s price movements. Ryan acknowledged that since April 2021, both have shown similar directional trends, leading to questions about whether investing in Coinbase is essentially a bet on Bitcoin itself. He recognized this correlation but expressed confidence that Coinbase’s business model is diversifying beyond just trading cryptocurrencies.
Ryan explained that Coinbase is evolving into a crucial infrastructure provider for blockchain technology, which will allow it to benefit from the broader adoption of blockchain, not just Bitcoin. He pointed out that Coinbase’s subscription services revenue has grown significantly, reaching a run rate of nearly $3 billion, compared to virtually zero in 2020. This diversification is expected to continue, positioning Coinbase for sustained growth.
In conclusion, Ryan maintained a bullish outlook on Coinbase, reiterating his buy rating and a price target of $400. He believes that as the company diversifies its offerings and capitalizes on the growing blockchain ecosystem, it will be able to move independently of Bitcoin’s price movements in the future. Overall, the discussion painted a positive picture of Coinbase’s potential in the evolving cryptocurrency landscape.