Analysts at Compass Point have revised their price target for Coinbase, reducing it from $266 to $230 per share while maintaining a “Sell” rating. This adjustment comes ahead of the exchange”s anticipated product announcements, particularly focusing on the potential of tokenized stocks.
In their latest report, the analysts highlighted that tokenized equities could represent a lucrative revenue stream for Coinbase, estimating it could bring in approximately $230 million, exceeding the projected $210 million from prediction markets.
The investment bank emphasized that while these new product offerings could diversify Coinbase”s revenue beyond traditional crypto trading fees, the benefits may take years to materialize. They expressed skepticism about whether these new ventures can effectively offset the earnings volatility that Coinbase faces, closely tied to fluctuating cryptocurrency prices.
On Monday, Coinbase”s stock fell by over 5% to $252, reflecting a year-to-date increase of just 1.7%. In contrast, Robinhood”s stock has surged by 215% to $118 during the same period, following the rollout of similar products.
As Coinbase prepares to launch tokenized equities for U.S. customers, the competitive landscape is heating up. The analysts noted that Coinbase”s trading model may closely resemble the payment-for-order-flow strategy used by traditional eBrokers, allowing the platform to earn rebates from market makers instead of charging commissions on trades.
The report cautioned that without distinctive advantages akin to traditional eBrokers, it may be challenging for Coinbase to attract users away from established platforms. The revenue projections from prediction markets, estimated at $200 million, could come from charging a minimal fee per contract traded, mirroring strategies seen with Robinhood and WeBull.
Moreover, the potential for generating $10 million in stablecoin revenue through such offerings could enhance Coinbase”s holdings of USDC, a stablecoin backed by Circle. Coinbase earns a significant portion of its revenue from assets associated with USDC when held on its platform.
Recent discussions on social media have hinted that Coinbase”s forthcoming products may be linked with the prediction market platform Kalshi, which has engaged Coinbase Custody for safeguarding USDC. Additionally, Coinbase has joined forces with Robinhood and Kalshi to form the Coalition for Prediction Markets, aimed at establishing clear regulatory guidelines for the sector.
