Long-term investors should consider loading up on shares of Coinbase Global Inc (NASDAQ: COIN) on the post-earnings decline, says Devin Ryan – a JMP Securities analyst.
The crypto company lost about 13% today after falling short of earnings estimates and offering muted revenue guidance for its current financial quarter.
But “nothing structural occurred here,” Ryan told investors in a research note on Thursday. Coinbase stock is now down more than 35% versus its year-to-date high in late March.
How high could Coinbase stock go?
Bitcoin has rallied close to 20% in recent weeks which may translate to “upward pressure on fourth-quarter revenue if the trend continues over the next two months,” as per Devin Ryan.
He also expects the US elections 2024 to be a tailwind for COIN especially now that polls have started to signal a Trump presidency. Donald Trump is broadly expected to favor the crypto industry than Kamala Harris.
JMP Securities maintained its “buy” rating on Coinbase stock today. The investment firm’s price target of $320 indicates potential for a whopping 75% upside from here. It’s bullish even though Crypto.com recently surpassed COIN as the top US crypto exchange.
For similar reasons, Ryan recommends investing in shares of Robinhood Markets Inc on the post-earnings weakness as well. The financial technology company reported a sequential hit to revenue and missed earnings estimates in its fiscal third quarter on Wednesday.
Robinhood stock is down more than 15% at writing.
COIN could benefit from a pro-crypto Congress
Coinbase reported a 7.0% decline in its subscription and services revenue in the third quarter.
But “things are going well in that department” as subscription and services revenue is on track to exceed $2.0 billion this year versus $1.4 billion in 2023, Brian Armstrong – the company’s chief executive told CNBC on Thursday.
CEO Armstrong expects the coming year to be a strong one for the crypto market regardless of who lands in the White House in November. On “Closing Bell Overtime”, he said:
Both presidential candidates are courting the crypto voter. So, no matter what happens in the elections, it’s going to be the most pro-crypto congress that we’ve ever had.
Brian Armstrong expects Coinbase stock to benefit as the company continues to expand its footprint in the derivatives space as well.
All in all, Q3 marked the fourth consecutive quarter of positive net income for COIN and that momentum could continue as BTC is broadly projected to extend its only rally in the coming months. Some even expect it to hit $100,000 by the end of 2024.
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