Coinbase's Role as a Vital Player in the Crypto Space Highlights Its Potential

Coinbase (COIN) is more than just a trading venue for cryptocurrencies, according to a research report released by Cantor Fitzgerald. The broker has kicked off coverage of Coinbase with an encouraging ‘overweight’ rating and a price target of $245. Following this news, the company’s stock saw an increase of over 5% in early trading.

Key Takeaways:

Cantor has commenced coverage of Coinbase with a favorable rating and a $245 price target.
The market seems to overlook the value of Coinbase’s operations beyond just trading activities.
The company’s layer 2 blockchain, Base, is considered a significant competitive advantage by Cantor.

Analyst Insights

Analysts Brett Knoblauch and Thomas Shinske indicated, “Markets are missing what it is doing beyond trading, particularly with its L2 (Base) and its stablecoin relationship with Circle.” They believe that Coinbase shares are appealing given that they are priced approximately 32% less than historical valuation multiples. They contend that both segments—Base and stablecoins—are pivotal in reshaping the perception of Coinbase, transforming it from a cyclical trading platform to an integral component of the cryptocurrency ecosystem.

The report predicts that Coinbase’s shares might experience a surge as investor understanding of the earning capabilities of Base and stablecoins enhances. The strong user growth on Base is anticipated to generate a beneficial ‘flywheel effect’ for the exchange, boosting transaction fee income.

Analysts also highlight the untapped potential of stablecoins, particularly regarding their capacity to compete with traditional financial cross-border payment systems.