Bitcoin (CCC:BTC-USD) and Shiba Inu (CCC:SHIB-USD) brought massive attention to cryptocurrency and also brought quick profits to the investors who had made the right moves at the right time. This has led to a huge interest in crypto, and even non-investors are tracking the movement of crypto assets. And that has been a boon for Coinbase (NASDAQ:COIN) stock.
Bitcoin managed to gain 49% last month and generated profits for several investors. It is a sign that crypto is here to stay. Crypto has massive potential in the financial future and there is a chance that COIN stock hits a new all-time high in the coming months.
With the pace at which crypto is moving, there will be new investors entering the market and it could give Coinbase a massive opportunity to grow. COIN stock has gone from $248 to $345 in the past six months and was up 40% in October.
I had recommended a buy in September when the stock was trading at $268. If you had bought COIN stock then, you would be sitting on 29% gains today. It looks like the stock will continue the upward trend. Let us look at my investment thesis for COIN stock.
Ample Space To Grow
The success of Coinbase will depend on the adoption of cryptocurrencies in general. It does not focus on one specific crypto but the market as a whole. Hence, a rise in crypto trading activity in the market will benefit the company. Crypto remains highly volatile, but the market has taken a few steps towards a predictable time.
Bitcoin has become the official currency of El Salvador and the U.S. is considering building a regulatory framework around it. This will work in favor of Coinbase, and any rise in the trading volume will help the company generate revenue. This will help COIN stock surge higher.
Whenever a hot new asset comes into the market, Coinbase can make the most of it by charging a trading fee. As the company continues to add new crypto assets to the platform, it will manage to attract new investors and increase the trading fee. Hence, the ups and downs in any crypto asset will not affect the bottom line of Coinbase.
The company recently reported third-quarter results and the EPS came in at $1.62, which is up to sevenfold compared to the same quarter previous year. The revenue did not meet analyst estimates but was up four times year over year.
Coinbase reported revenue of $1.31 billion and the monthly transacting users went from 8.8 million in the second quarter to 7.4 million in the third quarter. The assets on the platform stood at $255 billion in the third quarter, as compared to $180 million in the second quarter.
More than 50% of the assets are from institutional investors and the balance is from retail investors. The market was not happy with the results but all is not lost here. As long as the revenue keeps growing, there is a lot to look forward to.
Wall Street Is Bullish On COIN Stock
Wall Street analysts are bullish on COIN stock and believe it will rise in the coming months. Richard Repetto, a Piper Sandler analyst, has raised the price target of the stock to $440 and has an overweight rating. Further, Devin Ryan, JMP Securities analyst has a price target of $405 with an “outperform” rating and Canaccord analyst Joseph Vafi raised the price target to $342 with a “buy” rating on the stock. The analyst believes that additional products like non-fungible token (NFT) and direct deposit will enhance engagement and improve the wallet size.
Bottom Line
Whenever crypto assets hit new highs or lows, we will see volatility in the stock. However, it helps to remember that COIN stock is not directly associated with a particular asset and will not go down when Bitcoin falls.
Coinbase is a solid stock to buy at the current level. It may not be this cheap in the future and as the popularity of crypto-assets continues to grow, Coinbase will continue to attract users and generate revenue. It has massive growth potential and COIN stock could hit an all-time high in 2022.
On the date of publication, Vandita Jadeja did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Vandita Jadeja is a CPA and a freelance financial copywriter who loves to read and write about stocks. She believes in buying and holding for long-term gains. Her knowledge of words and numbers helps her write clear stock analyses.
