Coinbase Global (COIN) – Get a report declined on Tuesday after an analyst at Mizuho Securities raised its price target to $ 315 from $ 285 for the largest US cryptocurrency exchange, but said he was skeptical about the company’s medium-term outlook.
Shares in the San Francisco-based company fell nearly 5% to $ 279.56.
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Analyst Dan Dolev, who has a neutral rating on the stock, said in a note to investors that “the cryptocurrency surplus led to an increase in trading volumes on the Coinbase platform in April, almost reaching a record high in 1Q.”
If this trend continues, Dolev said, second-quarter revenues could exceed the consensus forecast by as much as 35%.
The analyst said he raised his price target despite his caution about the medium term.
“Despite the fact that Q2 looks stellar, we are still skeptical about the mid-term outlook,” said Dolev. “We are most concerned about the heavy reliance on retail commissions (80% of sales).”
Over time, Dolev said, Coinbase fees “could face downward pressure from competing platforms like zero-fee stock trading.”
“This is because platforms like PayPal (PYPL) – Get a report and Cash App mainly use cryptocurrency trading as interaction tools, ”the analyst said.
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Coinbase opened its first day of trading last month after going public through a direct listing.
The company said last week that it will acquire Skew, a data visualization and analytics platform for the cryptocurrency markets.
Venmo, owned by PayPal, recently announced that it has opened its service to buy, sell and store cryptocurrency directly in the Venmo app for just $ 1.
The service’s 70 million customers will be able to choose from four types of cryptocurrencies: Bitcoin, Ethereum, Litecoin, and Bitcoin Cash.