Coinbase (COIN) could be one of the crypto ecosystem’s few remaining players as a crypto winter continues to hit all corners of the industry, Owen Lau, a senior analyst at investment firm Oppenheimer, told CoinDesk TV’s “First Mover.”
“If many companies or if some companies go under, Coinbase could be one of the survivors in the space,” Lau said.
Lau has an outperform rating on COIN, with a price target of $73 in the next 12 to 18 months. In a note published on Monday, Lau predicted there will be “less than five legitimate crypto exchanges,” with Coinbase being one of them.
According to him, if the U.S. Federal Reserve continues to raise interest rates, half of Coinbase’s revenue could be made up of the exchange’s subscription services, which are tied to a partnership with stablecoin issuer Circle. In addition, the “many positives” that have yet to be priced into the exchange’s stock include Coinbase's market share gains, its strong balance sheet and its short squeeze potential, he said.
Oppenheimer forecasts Coinbase’s 2022 revenue to come in at $3.2 billion, a steep drop from its revenue in 2021, which reached $7.8 billion. Coinbase is expected to report fourth-quarter earnings toward the end of February.
But whether the exchange will make good on its promise to drive revenue via subscription services remains to be seen. Its biggest revenue source is from trading, though that is in peril given retail investors’ waning appetite and confidence in crypto.
Oppenheimer’s estimates were issued Monday, one day before Coinbase said it would be laying off 20%, or roughly 950 people, from its workforce. In June, the exchange laid off more than 1,000 people.
“Given that COIN has a more regulated and compliant platform, leading position in digital assets space, strong balance sheet and high brand recognition, we believe COIN is well positioned to emerge stronger,” Lau wrote in his note.
Read more: Coinbase Cuts Around 20% of Workforce as Crypto Winter Rages