Shares of Coinbase Global (NASDAQ: COIN) have fallen over 13% in the past two days. This came after Mizuho Securities analyst Dan Dolev slashed the price target on the stock to $190 from $220. Dolev’s new price target implies an upside potential of 14% on the stock.
The analyst remained sidelined on COIN with a Hold rating, as he viewed COIN chasing Non-Fungible Tokens (NFTs) as “costly.”
Dolev was referring to COIN’s plans to launch an NFT marketplace this year. Back in October, COIN had announced Coinbase NFT, a “peer-to-peer marketplace that will make minting, purchasing, showcasing, and discovering NFTs easier than ever.”
The reason Dolev does not view COIN chasing NFTs as a good move at this time is that the hype around NFTs seems to be waning. The analyst cited his analysis of internet searches which indicated “interest in NFTs has dramatically declined from its highs earlier this year.”
Moreover, by the analyst’s estimate, COIN may spend up to $300 million on setting up the NFT marketplace this year, which could result in the cryptocurrency exchange’s operating expenses ballooning by 130% year-over-year.
In addition to a rise in operating expenses, the company’s outlook this year has been marred by volatility.
COIN had cautioned in its Q4 letter to shareholders that the volatility in crypto asset prices and macroeconomic headwinds are unknowns making its “business all the more difficult to forecast.” As a result, the company expects that retail monthly transacting users (MTUs) and total trading volume will decline in Q1 of 2022 as compared to the fourth quarter of 2021.
As a result, COIN has projected its annual average retail MTUs in 2022 to vary anywhere from 5 million to 15 million.
The company also added that if COIN performed at the low end of its range, its adjusted EBITDA losses could be $500 million in Fiscal Year 2022.
Considering this volatility in the crypto marketplace and business uncertainties, Dolev reduced his estimates and price target for the stock. What’s more, the analyst’s proprietary volume analysis also points to a downswing in COIN volumes at $306 billion for the first quarter of Fiscal 2022.
Wall Street's Take
Other analysts on Wall Street, however, remain cautiously optimistic about the stock with a Moderate Buy consensus rating based on 12 Buys, two Holds, and two Sells. The average COIN stock forecast is $300.60, implying 80.8% upside potential from current levels.
Download the TipRanks mobile app now.
To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.
Read full Disclaimer & Disclosure
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
