Coinbase IPO “is an Amazon Moment for Cryptocurrencies” says D.A Davidson

Coinbase App User Interface
Coinbase App User Interface

Coinbase, the popular cryptocurrency exchange platform, is expecting a direct listing soon. The company said it has 43 million verified users with 2.8 million users conducting transactions on a monthly basis. An analyst for D.A Davidson said Coinbase’s upcoming IPO will be a milestone event.

“While we are still in the early stages of adoption, the market value of exchange-traded crypto assets was already approximately $782 billion as of December 31, 2020,” Coinbase said in its filing.

“Our objective is to drive the growth of the overall crypto-economy by serving the needs of all consumers who manage their financial lives on a mobile device. Additionally, every institution — large or small — which embraces the emerging internet of value,” continued Coinbase.

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In a note, D.A Davidson said the cryptocurrency exchange coverage is with a “buy” rating and a price target of $195. Gil Luria, Director of Institutional Research at D.A Davidson described Coinbase Initial Public Offering as an “Amazon moment for crypto.” Digital currencies will move from “a large curiosity to becoming the future path for much of the financial system.” 

After the direct listing, Coinbase will be the 1st major cryptocurrency exchange to go public. Furthermore, analysts argued Coinbase’s large user base has positioned the exchange as a “leader” in the field.

“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.

Coinbase nearly doubled its revenue

The company is also a broker, a fierce competitor to Grayscale, Gemini, and Kraken. Additionally, the exchange platform has millions of users who also use PayPal, Robinhood and Square added D.A. Davidson.

Based on 2021 revenue estimates, the firm has set a $195 price target. Last year, Coinbase’s revenue had hit $1.28 billion. More than 600 million compared to 2019 when the company generated 553.7 million according to a statement in Coinbase’s filings.

Following Bitcoin (BTC) rally in December, the exchange generated 96% of its net revenue from transactions. Bitcoin soared above new all-time highs since then, and the company highly profited from high transaction rates. 

D.A Davidson added, compared to other companies – Coinbase is a “more speculative investment” . The investment company argued Coinbase shares will be linked to the highly volatile price of cryptocurrencies. Consequently, Davidson said it’s early to tell if Coinbase will be the next Amazon in the crypto industry.