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- Investor expectations are rising for Coinbase following a bullish note from Da Davidson.
- The firm increased its price target for Coinbase by 125% to $440 following "spectacular" earnings.
- Coinbase operates a cryptocurrency exchange platform and is expected to make its public debut on April 14.
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Anticipation for Coinbase's April 14 direct stock listing on the Nasdaq is growing following the release of its preliminary first quarter earnings results.
The cryptocurrency exchange platform revealed first quarter revenue grew 840% year-over-year to $1.8 billion, easily beating analyst estimates from DA Davidson, which was expecting just $614 million in revenue for the quarter.
The blow-out results from Coinbase led DA Davidson to reiterate its Buy rating on the company and increase its price target by 125% to $440 in a note on Wednesday. Its previous price target for Coinbase was set at $195.
Coinbase's first quarter results were "multiples higher than our estimates on both the top and bottom lines," DA Davidson analyst Gil Luria said. Near record trading volume on its platform as bitcoin surged to record all-time highs boosted Coinbase's earnings results.
"We continue to believe COIN's product experience and best-in-class compliance and regulatory controls should provide a defensible moat," the note said, before adding that management at Coinbase is well prepared to protect its business if a bear market in bitcoin materializes.
"It is no question that Coinbase's revenue is highly correlated to bitcoin," Luria said. Bitcoin soared 104% in the first quarter to just under the $60,000 level, which has consistently served as resistance over the past two months.
DA Davidson derived its $440 price target from a 20x multiple on Coinbase's expected 2021 revenue. Coinbase last traded at $350 per share in a private auction on the Nasdaq Private Market, affording the company a $90 billion valuation.