Shares of Coinbase Global Inc. COIN have gained 27.8% in the past six months, outperforming the industry’s increase of 26%, the sector’s increase of 19.2% and the Zacks S&P 500 composite’s rise of 13.4% in the same time frame.
COIN provides financial infrastructure and technology for the crypto economy in the United States and internationally and is America's largest registered crypto exchange. It has a market capitalization of $74.1 billion. The average volume of shares traded in the last three months was 13 million.
Trump’s second term, given a pro-crypto environment and easing regulatory control, is expected to benefit COIN stock. Kara Calvert, vice president for U.S. policy at Coinbase Global, stated, “You have a president who embraces digital assets and created an advisory council that recognizes the need for non-government expertise. That’s really exciting.”
COIN vs Industry, Sector & S&P 500 in 6 Months
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COIN Trading Above 50-Day SMA
COIN has been trading above its 50-day simple moving average (SMA), signaling a short-term bullish trend. The 50-day SMA is a key indicator for traders and analysts to identify support and resistance levels. It is considered particularly important as it is the first marker of an uptrend or downtrend.
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Average Target Price for COIN Suggests a Downside
Based on short-term price targets offered by 23 analysts, the Zacks average price target is $289.78 per share. The average suggests a potential 2.1% upside from Thursday’s closing price.
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Earnings Whispers
The crypto leader is slated to release its fourth-quarter 2024 results in February. Though the Zacks Consensus Estimate for earnings indicates a year-over-year decrease of 16.4%, the consensus estimate has moved 13% north in the last seven days, reflecting analyst optimism.
See the Zacks Earnings Calendar to stay ahead of market-making news.
Also, our proven model predicts an earnings beat for COIN this time around. This is because COIN sports a Zacks Rank #1 (Strong Buy) and has an Earnings ESP of +51.52%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Factors Favoring COIN Stock
America's largest registered crypto exchange is set to benefit from higher crypto asset volatility and crypto asset prices. Focus on regulatory clarity further benefits Coinbase and the broader crypto economy. The company could win smart contracts because of Ethereum, the second-largest cryptocurrency.
COIN should climb higher by strengthening banking connections, acquiring new licenses and expanding tailor-made product ranges to meet unique customer preferences.
Coinbase stays focused on growth by increasing its market share in the U.S. spot and derivatives markets and expanding its product portfolio and international market. Sufficient liquidity supports strategic investment in growth initiatives and expands its service offerings.
This apart, growth in stablecoins should also fuel the company’s top line. COIN has successfully maintained positive EBITDA for the last six consecutive quarters, banking on a subscription-based model.
COIN has prioritized crypto utility and envisions bringing 1 billion or more people on the crypto rail. It is thus heavily investing in infrastructure and foundational platforms like Layer 2s, Base and Stablecoins. COIN partnered with Stripe to enhance the global adoption of crypto.
Unfavorable Return on Equity
COIN’s return on equity in the trailing 12 months was 14.81%, lower than the industry average of 48.15%, reflecting inefficiency in utilizing shareholders’ funds.
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The return on invested capital in the trailing 12 months was 7.6%, which compared unfavorably with the industry average of 21.4%. This reflects the insurer’s inefficiency in utilizing funds to generate income.
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Muted Analyst Sentiment for COIN
The Zacks Consensus Estimate for 2025 has moved 4 cents down in the past 30 days.
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The Zacks Consensus Estimate for 2025 earnings suggests a 39% decrease on 1.3% lower revenues.
Expensive Valuation
Coinbase shares are trading at a premium to the Zacks Financial Transaction Service Market. Its 12-month forward price-to-earnings of 84.86X is much higher than the industry average of 25.42X, the broader sector’s 24.43X and the Zacks S&P 500 composite’s 22.05X.
Its Value Score of F suggests that the stock is not so cheap and indicates a stretched valuation at this moment.
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Shares of Robinhood Markets HOOD and Interactive Brokers Group, Inc. IBKR, two other crypto-oriented stocks, are also trading at multiples higher than the industry average.
Parting Thoughts on COIN Stock
The inherent volatility in crypto prices exposes COIN to operational risks. The failure of its foundational platforms also poses risks. Coinbase, the custodian of client assets, is also exposed to cyber threats.
Nonetheless, Coinbase’s efforts to accelerate growth in the crypto market, increase market share in spot trading on consumer and institutional trading platforms and improve trading experience, along with continued innovation, should help it accelerate growth.
Despite its premium valuation, one can add COIN stock for better returns.
You can see the complete list of today’s Zacks #1 Rank stocks here.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
