Oppenheimer analysts lowered their price target on Coinbase Global, Inc. (NASDAQ:COIN) to $70 from $84, highlighting the failures of SVB Financial Group, Silvergate Capital Corporation (SI), and Signature Bank that has rocked the digital assets and Silicon Valley ecosystems.
While the financial system may be stabilized by emergency measures, key infrastructures of the public blockchain/digital assets industry in the US, namely SEN and Signet, have been broken. However, the firm mentioned that exchanges, trading firms, market makers, and investors can use stablecoin, ACH, Customer Banks, and BCB (coming) to facilitate transactions. There could be a reduction in liquidity and trading volume unless someone fills the gap, leading to lingering uncertainty in both USDC and the industry.
Coinbase’s revenue share agreement with Circle/USDC is an important pillar for its interest income and diversification effort. The analysts had estimated that interest income will contribute $766 million or 22% of total revenue to Coinbase in 2024. The threat of redemption on USDC leads them to lower their interest income estimate to $686 million.
Why Coinbase Price Target Was Cut to $70 at RBC?