What Happened?
Shares of blockchain infrastructure company Coinbase (NASDAQ: COIN) jumped 5.9% in the pre-market session after Bernstein analyst Gautam Chhugani reaffirmed a Buy rating and raised the price target from $310 to $510.
The analyst added that "Coinbase is the most misunderstood company in our Crypto coverage universe" and thinks the stock can rally nearly 50%.
Chhugani cited some of the catalysts that informed the improved outlook, noting COIN is the only "Crypto company in the S&P500, dominates U.S. Crypto trading market, runs the largest stablecoin business amongst exchanges, dominates institutional Crypto, acquired the largest global crypto options exchange and runs the largest and fastest chain on Ethereum forming the tokenization network."
After the initial pop the shares cooled down to $352.30, up 2.2% from previous close.
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What The Market Is Telling Us
Coinbase’s shares are extremely volatile and have had 65 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 7 days ago when the stock gained 11.3% after crypto linked stocks secured a major victory as the Senate passed the GENIUS Act (a bill that outlines regulatory guidelines for stablecoins).
Stablecoins are cryptocurrencies designed to keep a steady value, usually pegged to the U.S. dollar. The bill provides a much-needed legal framework and aims to build trust in digital assets.
For Coinbase, a major player in the stablecoin market and the broader crypto ecosystem, this new law reduces regulatory uncertainty and could pave the way for increased institutional and retail adoption.
To quantify the market opportunity, Treasury Secretary Scott Bessent told lawmakers that the U.S. stablecoin market could explode to over $2 trillion in the next few years, growing nearly eightfold.
Adding to the positive news, Coinbase sought regulatory approval from the U.S. Securities and Exchange Commission (SEC) to offer tokenized equities.
Coinbase's Chief Legal Officer, Paul Grewal, noted in a Reuters interview that the concept is a "huge priority." Barclays analysts weighed in, highlighting some of the merits, including "back-office cost savings, faster settlement times, and potentially easier facilitation of international access."
This suggests that tokenized equities could help COIN expand its market share and ultimately grow its revenue as it offers more tradable assets and options to its users.
Coinbase is up 37% since the beginning of the year, and at $352.30 per share, has set a new 52-week high. Investors who bought $1,000 worth of Coinbase’s shares at the IPO in April 2021 would now be looking at an investment worth $1,073.
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