Needham & Company analysts are expressing a mixed outlook on Coinbase (COIN) stock, highlighting both short-term challenges and long-term optimism. While acknowledging a strong Q1 performance, the firm believes recent street forecasts for the company are overly bullish, neglecting the current weaker market conditions.
Needham cites declining retail engagement as a key concern, with most new crypto investors experiencing losses and becoming hesitant to invest further. Consequently, the firm is lowering its Q3 forecast and expects cuts to Q2 2024 revenue and earnings expectations.
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Despite the near-term headwinds, Needham remains optimistic about Coinbase’s long-term prospects, retaining a “Buy” rating and a $260 price target. The analysts point to several positive factors expected to impact the company in the second half of 2024 and early 2025, including a potential Trump victory, which is seen as favorable for crypto, upcoming Ethereum ETFs, and the positive outlook for Bitcoin post-halving.
Needham highlights Coinbase’s position as a market-leading fiat-crypto on-ramp, emphasizing its strong retail and institutional growth potential. The company’s easy-to-use retail application and growing momentum among institutional firms are key strengths for future growth.
Overall, Needham sees Coinbase as a compelling investment opportunity in the evolving crypto market landscape, despite acknowledging the short-term challenges. The firm believes the company’s dominant position in the fiat-crypto space and its expanding institutional business will drive long-term growth.