According to Needham analyst John Todaro, Coinbase Global Inc. “has little direct exposure to FTX,” but that doesn’t mean the crypto exchange is immune to the “contagion” resulting from the recent crash of FTX.
While Coinbase
COIN,
With only $15 million in crypto assets on the FTX platform, Todaro says he sees greater risks to crypto exchanges stemming from the boom of FTX.
See more: Coinbase Is Not ‘Another FTX’ But Its Stocks Face Growing Risk, Bank of America Warns of Downgrading
In a note to clients, Todaro warned that while the failure of FTX has resulted in short-term volatility, increased volume, and increased market share for Coinbase, that momentum could be “relatively short-lived.” “. He says he sees potential for “retail and [institutional] trading activity” in the first half of 2023.
Read: Coinbase Worth Under $10 Billion For First Time As ‘Crypto Winter’ Continues
“Users are concerned about the risk that centralized exchanges may lead to withdrawals,” he wrote. “While Coinbase is audited and maintains 1:1 support for user crypto assets, withdrawals are higher when users withdraw assets from centralized exchanges. Bitcoin held on exchanges has dropped to its lowest level since 2018.”
Additionally, he wrote that the US government could place a greater priority on crypto regulation starting in the first quarter of 2023, offering the potential for tighter rules around exchanges. translators, custodians, and perhaps stablecoins.
“While this could turn out to be a positive catalyst for COIN, due to its regulatory status compared to foreign competitors like Binance, overly strict regulation could limit DeFi [decentralized finance]NFT and other use cases for cryptocurrencies, which will reduce trading volume, interest, and activity across the space,” Todaro wrote.
He cut his price target on Coinbase shares to $73 from $89 on Tuesday while lowering his fiscal 2023 revenue estimate to $3.7 billion from 4.7 billion dollars.
However, he maintains his buy rating on the stock and continues to like it in the long run.
Barclays analyst Benjamin Budish also weighed in on the impact of the FTX crash on Coinbase, saying that he sees “minimum (low to mid-single digit) upside potential for the exchange’s trading revenue. Coinbase due to geographical overlap between the two companies, our capture assumptions and early reading of where FTX funds are flowing.”
He reduced his price target on Coinbase stock to $44 from $55 while maintaining an balanced rating.
Coinbase shares are up 1.4% in Tuesday morning trading, though they have lost 83% year-to-date, while the S&P 500
SPX,
fell 17% in the same time period.
