“Coinbase is rapidly losing market share and seeing significant take rate compression — we expect these trends to accelerate as competition intensifies (Robinhood, FTX & Binance the most dangerous),” Bolu said in a fiery note Wednesday morning. The analyst started coverage of Coinbase with an Under-perform rating. “More concerning is Coinbase lagging on almost every crypto innovation (including altcoins, derivatives, NFTs). If the trend continues, Coinbase could rapidly lose relevance, much like Netscape did in the early internet era.”
Bolu initiated coverage of Coinbase with a $160 price target, or potential downside risk of $160 from current levels.
Coinbase shares fell nearly 1% to $248.30 in pre-market trading Wednesday. Shares of Coinbase are down about 24% over the past six months despite the rally back in bitcoin and other crypto prices in recent months. The stock remains below its closing price ($328.28) on its first day of trading on April 14 as investors remain concerned about rising competition from Robinhood and other crypto platforms.
Constant worries about fee compression also continue to plague the stock, experts say.
Bolu had more upbeat words for Robinhood, initiating the stock with an Out-perform rating and $55 price target (38% upside from current levels).
“After significant user growth in 2020/21, we expect future revenue growth to be primarily driven by increased monetization (most notably in crypto and lending). This could triple Robinhood’s average revenue per user over the next 3-5 years. Longer-term, disruptive actions on deposit pricing (if rates rise) and international expansion could power the next leg of account growth,” Bolu said.