Investment banking company Piper Sandler (PIPR) recently reiterated its Overweight rating on cryptocurrency exchange platform Coinbase (NASDAQ:COIN)
Piper Sandler also suggested that now was a good time to buy the recent dip on the company. I'm only slightly less bullish on Coinbase than Piper Sandler is.
Coinbase stock is well off its high of $429.54, down over 43%. The stock has spent most of the year between $325 per share and $225 per share, and generally sticks to the lower end of that range. (See Coinbase stock charts on TipRanks)
Coinbase recently slid on news that the Securities and Exchange Commission (SEC) was planning to investigate the company over Coinbase's “Lend” product. The Lend system called for stablecoin holders to lend to other users in exchange for interest payments, and the SEC was prepared to sue Coinbase over such a move. Reports from the SEC suggest that Lend looked like an unregistered security product.
Wall Street's Take
Wall Street consensus analysis calls Coinbase a Moderate Buy. That's based on 11 Buys, three Holds, and one Sell.
The average Coinbase price target of $350.17 implies upside potential of 43.9%.
Still the Biggest Game in Town
A potential SEC investigation is never good news. However, there's still a lot giving Coinbase some extra edge. For instance, Cathie Wood's Ark Investment Management recently bought 101,823 shares of Coinbase. Clearly there's some faith in this operation out there, and not just from Piper Sandler.
Several other investment bank analysts are also projecting that Coinbase's rebound is only a matter of time.
More than that, though, it's worth remembering Coinbase's position in the market. It's still the leading platform when it comes to trading cryptocurrency. Sure, there are competitors in the market. Longtime firms like Bittrex are in play, as are comparative newcomers like eToro.
Yet, for many, Coinbase is still the first name to turn to when it comes to buying and selling cryptocurrency. That kind of market advantage is hard to lose, and comparatively easy to keep.
Coinbase can improve, of course, by allowing access to more kinds of cryptocurrency, but it's usually good to have ways to improve in your back pocket, ready to bring out as needed. Coinbase only allows trading in 50 different coins, and there were over 4,000 cryptocurrencies available as of January 2021.
Concluding Views
It's hard not to be somewhat bullish on Coinbase. Users will likely turn to Coinbase as long as they have an interest in buying, selling, or just holding cryptocurrency. Coinbase has long since established itself as a reliable platform for dealing in cryptocurrency.
That's going to keep users coming in, and that should also keep investors interested.
Disclosure: At the time of publication, Steve Anderson did not have a position in any of the securities mentioned in this article.
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