Yes, Coinbase Shows Impressive Growth — and Yes, Coinbase Stock Is Still a Sell, Says Raymond James

It looks like 4Q21 was a good one for Coinbase (COIN). According to Nomics data, total trading volumes in the quarter reached $539 billion, up 505% from the same period last year and representing a 65% sequential increase. (See Coinbase website traffic)

At $6.1 billion and $6.8 billion, respectively, the October and November trading volumes amount to the third- and second-highest monthly average daily volumes (ADV) on record. In December – as is usually the case with most major trading products during the seasonally slower month – volumes exhibited a notable month-over-month decline, with ADV notching only $4.8 billion.

Nevertheless, the result would represent the company’s best quarter on record.

That, however, would still not match Raymond James’ Patrick O’Shaughnessy’s expectations, with the volumes coming in “marginally below” his full-quarter forecast. The analyst reckons this is down to “slightly slower retail activity (vs. a still robust institutional channel).” Accordingly, to reflect lower 4Q21 volumes, O’Shaughnessy reduced his 4Q21 non-GAAP EPS estimate by $0.15 to $1.35.

In fact, standing out as a rare bear amongst his mostly bullish colleagues on Wall Street, O’Shaughnessy does not see Coinbase as a long-term winner. While the company is an “established leader” in the space and currently enjoys “substantial momentum” as the US’s preeminent trading platform for cryptocurrencies, the 5-star analyst is not convinced.

“The vast majority of its revenues currently come from trading commissions, and we expect significant pricing degradation over time, with growth in non-transaction revenues hard-pressed to offset this,” O’Shaughnessy said. “In addition, we can’t overemphasize the regulatory and political risks facing the business model, including the applicability of existing securities laws to revenue streams such as Staking, new tax reporting requirements, the examination of best-execution obligations for brokers, and stablecoin regulation.”

All the above results in an Underperform (i.e., Sell) rating and no fixed price target for Coinbase shares. (To watch O’Shaughnessy’s track record, click here)

Overall, one other analyst joins O’Shaughnessy in the bear camp, but with 12 additional Buys, the stock boasts a Strong Buy consensus rating. Moreover, the average price target is an optimistic one; at $402.33, investors could see returns of ~73% in the year ahead. (See Coinbase stock analysis on TipRanks)

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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.