Analysts at JMP Securities firmed up their view of cryptocurrency exchange Coinbase (COIN -7.68%) on Tuesday, noting now there is less room for error for the company. Nevertheless, JMP Securities maintained its "outperform" rating and boosted its price target to $320. That new price target represents potential upside of 25% from the stock's Apr. 8 closing price.
Riding Bitcoin higher
Shares of Coinbase have surged this year as Bitcoin has rallied nearly 70% so far in 2024.
Coinbase has also made legitimate progress in reducing its costs, a necessity as cryptocurrency trading volumes dried up during the last crash. The company has also expanded its sources of revenue beyond transaction fees.
The company's latest results put this progress on display. While revenue was down slightly in 2023, adjusted EBITDA surged into positive territory, and the company even reported a small net profit. Coinbase benefits when cryptocurrency prices are rising or volatile, both of which can induce heightened trading activity.
Is Coinbase stock a buy?
The big problem with Coinbase stock is that most of its revenue sources ultimately require sustained interest in cryptocurrencies. The company now generates meaningful revenue from stablecoins, but the sustainability of that revenue is unclear.
It may be a better idea to invest in Bitcoin directly or through an exchange-traded fund rather than speculate on Coinbase stock. While Coinbase is a much leaner company than it was during the last cryptocurrency bubble, the company has yet to show that it can sustainably turn a profit outside of those bubbles.
