Open main menu
Home
Random
Donate
Recent changes
Special pages
Community portal
Preferences
About Stockhub
Disclaimers
Search
User menu
Talk
Contributions
Create account
Log in
Editing
Coinbase
(section)
Warning:
You are not logged in. Your IP address will be publicly visible if you make any edits. If you
log in
or
create an account
, your edits will be attributed to your username, along with other benefits.
Anti-spam check. Do
not
fill this in!
==Valuation: We see 36% upside to our $306 12 month price target== We value COIN using a multiple of 2023E sales. In deriving our price target we looked at a number of market structure and payments-related companies. While market structure and brokerage comps make sense to us given COIN operates a cryptocurrency exchange, we believe the long-term thesis in crypto revolves around the adoption of crypto for commerce and payments, and thus we think the expansion of the crypto ecosystem (and thus the prospects for Coinbase) are similarly tied to a payment adoption curve over the long run. We believe looking at revenue multiples is appropriate given the volatility of COIN’s operating margins (discussed in the last section), as well as the company’s messaging that they are not optimizing the P&L for the current revenue base and expect to operate at breakeven through the cycle. While we are unsure if we will see these lower levels of profitability in the near term given the ongoing bull market in crypto and COIN’s high levels of profitability, investors will likely turn to revenue multiple in future periods of depressed profitability. Our comp group includes MKTX, TW, CME, NDAQ, ICE, IBKR, SQ, and PYPL. These peers currently trade at roughly 14x on average in terms of EV/sales on a 2022E basis. The payments comps tend to trade a high teens revenue multiples whereas market structure comps tend to trade at low teens multiples (Exhibit 60). Given our base case for the crypto ecosystem to remain a largely store-of-value oriented ecosystem, we primarily focus on the market structure comps for the purposes of valuing Coinbase, and view the higher multiples for payments related names as representing an upside opportunity should the crypto-native ecosystem develop further. To arrive at a 1 year forward view, we apply a 13x multiple to our 2023 estimates. We then adjust for our 1 year forward net debt assumption of roughly $4.2bn in net cash, implying a 1 year forward market cap of ~$81bn. This implies a 12 month target price of $306, implying 36% upside to shares from current levels. Given the sensitivity to crypto prices, we also believe it is helpful to show how our valuation would change under various crypto market cap assumptions. Thus, in Exhibit 59, we show the resulting valuation for a 100% increase in crypto prices as well as a 50% decline in crypto prices (these are the same numbers derived in Exhibit 56). In a + 100% scenario we believe COIN’s valuation could increase by as much as 70%, whereas we see roughly 30% downside in our down 50% scenario.
Summary:
Please note that all contributions to Stockhub may be edited, altered, or removed by other contributors. If you do not want your writing to be edited mercilessly, then do not submit it here.
You are also promising us that you wrote this yourself, or copied it from a public domain or similar free resource (see
Stockhub:Copyrights
for details).
Do not submit copyrighted work without permission!
Cancel
Editing help
(opens in new window)