Investors holding shares of Coinbase Global (COIN) will feel much better than it did at the beginning of the year.
In 2023, the stock was up at a staggering 89%, but the fierce bull run is now giving DA Davidson analyst Chris Brendler a signal to rally. Ahead of Coinbase’s fourth-quarter earnings report due next Tuesday, Brendler’s team downgraded the stock to Neutral from Buy, and raised its price target to $60 from $55.
“The stunning failure of FTX is still reverberating throughout the industry and although it appears to have avoided major ripple effects so far (Binance),” Brendler said in a research note on Thursday. are monitoring), we believe the regulatory response is just beginning.”
“While we still agree with [Coinbase] Management’s view that improved clarity and a level playing field will ultimately prove to be good, for both Coinbase and the industry as a whole, the short-term path looks increasingly perilous.”
Shares of Coinbase rose about 3% on Thursday amid stronger gains in the crypto asset as bitcoin traded above $25,000 for the first time in six months.
“You don’t need to own Coinbase to play bitcoin, miners like Riot Blockchain (WOMEN RURGE) have no debt and bitcoin on their balance sheet has a lot more upside potential than Coinbase,” Brendler told Yahoo Finance in an interview.
Execute pick up
Over the past week, U.S. regulatory enforcement actions have targeted crypto companies in three of Coinbase’s businesses.
The SEC settled fees with competitor exchange Kraken a week ago, with the company paying a $30 million fine and agreeing to end its crypto staking program in the United States.
In Monday, stablecoin issuer Paxos also closed new minting for stablecoin Binance USD. The company also said it received a notice from the SEC Wells, notifying the company of a potential enforcement action.
On Wednesday, the SEC proposes to amend its custody rules for investment advisors, which, if approved, would include requiring registered investment advisors, hedge funds, and asset managers to hold their clients’ cryptocurrencies with a sufficient custodian condition.
For Coinbase, the meaning is not clear. The company’s chief legal officer, Paul Grewal, told Yahoo Finance last week it planned to defend its staking program in court, if necessary. Tackling SEC’s New Custody Proposal, Grewal Also speak Fourth, as a trust company, Coinbase meets the agency’s definition of a qualified custodian.
Stablecoin issuer Circle, which pays Coinbase a portion of its asset reserves held in the US Treasury in the form of interest income, also informed Yahoo Finance on Wednesday that it had not received notice. Wells from the SEC following the notice Paxos received.
“We think this may just be the first wave of political attacks on crypto,” DA Davidson wrote in his note. “Recent notes have highlighted the opportunity for staking and stablecoins due to higher interest rates as potential fortunes for Coinbase. Given the recent actions of the SEC, it may not be as great as we thought.”
For the third quarter, Coinbase posted combined revenue of $178.9 million from its staking, custody, and interest income businesses.
This represents 84% of Coinbase’s non-trading revenue, the smaller business the crypto exchange’s analysts look to grow while crypto trading has proved sluggish this season. cryptocurrency crowd.
DA Davidson is below Coinbase’s trading revenue consensus estimate, which predicts it fell 8.2% in Q4 to $541.4 million from $590.4 million.
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