- Coinbase's upcoming direct listing will be an "Amazon moment" for cryptocurrencies, according to D.A. Davidson.
- The firm initiated coverage of the crypto exchange with a "buy" rating and $195 price target.
- D.A. Davidson said the public debut will be a milestone for the convergence of cryptocurrency and traditional finance.
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Coinbase's upcoming direct listing will be a milestone event, marking the covergence of cryptocurrency and traditional finance, according to a team of D.A. Davidson analysts.
In a recent note D.A. Davidson initiated coverage of the cryptocurrency exchange with a "buy" rating and a price target of $195. Analysts led by Gil Luria said Coinbase's public debut will be the "Amazon moment for crypto," as cryptocurrency will move from "a large curiosity to becoming the future path for much of the financial system."
Coinbase will be the first major cryptocurrency exchange to go public. According to the analysts, the exchange's superior user experience has positioned it as the "leader" in facilitating the onramp/off-ramp from government currency (like dollars) in crypto (like bitcoin.)
"With a big target on its back as a crypto wallet, (to date) Coinbase has been able to manage both government regulators as well as highly motivated hackers, while providing consumers with the experience they expect from a large financial institution," the analysts added.
As both an exchange and broker, Coinbase's competition includes Grayscale, Kraken, and Gemini, as well as broader consumer digital wallets like Square, PayPal, and Robinhood, said D.A.Davidson.
The firm's $195 price target is based on 2021 revenue estimates, but the firm has not been able to connect with Coinbase during its quiet period. Revenue in 2020 was $1.28 billion, a jump from $553.7 million in 2019, according to a consolidated operations statement included in Coinbase's filings.
For the year ended December 31, 2020, transaction revenue represented over 96% of net revenue. Bitcoin has soared 68% in 2021 and it's unclear how that affects revenue estimates.
D.A. Davidson noted Coinbase is a more speculative investment than other companies it covers. They also noted the unusually high risks associated with the volatility of crypto prices, and said it's too early to tell if Coinbase will actually become the Amazon of crypto or the Netscape.