One Wall Street Analyst Predicts a 25% Increase in Coinbase Stock Value

Industry experts at JMP Securities have solidified their stance on the cryptocurrency platform Coinbase ( COIN -5.46%), pointing out on Tuesday that the margin for error is now smaller. Despite this, JMP Securities has maintained its recommendation to “outperform” and has increased its target price to $320, which suggests the stock could climb by 25% from its price as of April 8th.

Capitalizing on Bitcoin’s Climb

Coinbase’s stock has exhibited a notable increase as Bitcoin‘s value has soared by nearly 70% within 2024.

Moreover, Coinbase has made significant strides in slashing its expenditures, which is essential as the volume of cryptocurrency trading plunged after the most recent downturn. The firm has widened its revenue avenues, extending beyond mere transaction fees.

The recent financial results of the company showcase this forward movement. Although there was a slight decrease in revenue in 2023, Coinbase demonstrated an impressive rise in adjusted EBITDA and even reported modest profit. The company thrives in scenarios of increasing or volatile cryptocurrency prices, which often result in more active trading.

Should You Consider Buying Coinbase Stock?

A daunting challenge for Coinbase stock is its reliance on persistent enthusiasm in the crypto market for most of its earnings. While the company now derives significant income from stablecoins, the reliability of these earnings over the long term remains uncertain.

Opting to invest directly in Bitcoin or through an ETF might be more prudent than wagering on Coinbase’s shares. Even though Coinbase’s operations are now more streamlined than they were during the previous crypto frenzy, it has not yet proven its ability to generate profits consistently outside these high market phases.