Is Coinbase stock a buy as Needham analyst predicts solid Q3 volumes?
- Coinbase shares on Friday edged slightly lower despite receiving an upbeat update from Needham.
- Senior Analyst John Todaro told CNBC he predicts Coinbase to deliver strong volumes in Q3.
- Todaro cited rising interest in the so-called "Layer-1" cryptos that compete with Ethereum as a catalyst.
The analyst cited rising interest in cryptocurrencies that compete with Ethereum as a potential catalyst. However, Todaro also warned that for the company to spark sustainable growth, it will need to diversify its revenue channels beyond exchange trading.
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He pointed to Coinbase’s efforts to grow its derivatives trading and staking businesses as a significant step in revenue diversification.
Coinbase shares are down more than 24% since going public in April, thereby creating an exciting opportunity to buy.
Time to bet on COIN growth?
From an investment perspective, Coinbase shares trade at a reasonable P/E ratio of about 31.25, making the stock attractive to value investors. Moreover, analysts predict its earnings will grow by a whopping 519% this year before rising at an average annual rate of 66.30% over the next five years.
Therefore, growth investors could also find the stock compelling for long-term investing. As a result, Coinbase seems poised for a significant bull-run in the coming quarters.
Is the rebound over?
Technically, Coinbase shares seem to be trading within a descending channel formation in the intraday chart. However, the stock has recently bounced off the trendline support to surge above the 100-day moving average.
As a result, the stock has now surged closer to the trendline resistance leaving little room for an upward movement. However, with shares yet to reach overbought conditions, the current gains could continue for the foreseeable future.
Investors could target extended gains at approximately $264.08, or higher at $280.03. On the other hand, if the trendline resistance triggers a pullback, the stock could find support at $230.08, or lower at $213.37.
Is it too late to buy COIN?
In summary, although Coinbase shares have recently spiked, rallying towards the trendline resistance, the stock is far from reaching overbought conditions, leaving room for more upward movement.
Therefore, given the company’s exciting growth prospects, it could be time to buy the stock before shares advance further.