Barclays analyst Benjamin Budish has maintained a “Sell” rating on Coinbase Global (COIN) stock despite the buzz around spot ETFs (exchange-traded funds). Budish referred to the $14 million net outflows from U.S. Spot Ethereum ETFs last week for his view on COIN stock.
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Budish is Bearish on Coinbase
Coinbase acts as a custodian and primary broker for six Spot Ethereum ETFs and eight Spot Bitcoin ETFs. The company gains from the growing AUM (assets under management) and trading activity (creation/redemption) of the spot ETFs, since it earns custodian fees. However, Budish cautioned that Coinbase could be impacted by intense competition for trading volumes.
There have been concerns that the existence of low-cost spot ETFs could diminish Coinbase’s margins. With the launch of the spot ETFs, investors can easily engage in their trading through traditional brokers or regulated stock exchanges, thus impacting Coinbase’s custodial base. Coinbase would have to reduce its trading commissions and spreads to compete effectively with the cheaper alternatives for trading in spot cryptocurrencies like Bitcoin (BTC-USD) and Ethereum (ETH-USD).
Coinbase recently reported mixed second-quarter results. The company witnessed a 28% sequential decline in its trading volumes and a 27% fall in the overall transaction revenue.
Benjamin Budish ranks 1,126 out of the 9,008 analysts ranked on TipRanks’ universe. Budish boasts an average return of 7.60% and has a success rate of 69% in the past year. The analyst has a $206 price target on Coinbase, implying 4.4% upside potential from current levels.
Website Traffic Hints at COIN’s Strong User Base
According to TipRanks’ Website Traffic tool, the total estimated visits to all of Coinbase Global’s apps and websites worldwide increased 15.72% in the year-to-date period compared to last year. The tool reflects growth in Coinbase’s user base despite the perceived headwinds.
Is Coinbase a Buy or Sell?
Wall Street remains divided on COIN stock’s trajectory. On TipRanks, COIN has a Moderate Buy consensus rating based on seven Buys, six Holds, and two Sell ratings. Also, the average Coinbase Global price target of $259.62 implies 31.6% upside potential from current levels. Shares have gained 13.4% so far this year.
