DA Davidson raises Coinbase price target to $440 from $195

Now, that’s what I call a raise! Coinbase is all set to go public via a direct listing on Nasdaq next week, and anticipation among investors is running absolutely wild.

Investment firm DA Davidson is in on the action too, and believes that the US crypto exchange has all that it takes to deliver healthy margins in the immediate and far future despite the infamous volatility of Bitcoin.

These thoughts arrive after Coinbase revealed its blowout Q1 earnings results. Its active users doubled quarter over quarter while revenue tripled over the same time period. All these factors have led the investment bank to up its price target for the company’s shares by 125%.

Wow!

Davidson estimates the exchange will have 205.6 million shares outstanding. And while that share count may change, it does imply a $90 billion market cap, according to Gil Luria, head of institutional research at Davidson.

This is what the note sent to investors says:

“Coinbase reported preliminary 1Q21 results prior to its direct listing that were multiples higher than our estimates on both the top and bottom lines. We continue to believe COIN’s product experience and best-in-class compliance and regulatory controls should provide a defensible moat.”

COIN, then, is rated as a buy.

Davidson raised the exchange’s share price target from $195 to $440 — a 20x multiple of its expected 2021 revenue.

The $1.8 billion in revenue that Coinbase reported beat Davidson’s estimate of $614 million and then some. While trading volumes were also higher than Davidson expected, with expenses, interestingly, coming in lower than predicted.

Davidson sees Coinbase posting quarterly revenue of at least $800 million for each remaining quarter of the year to go with a full-year revenue to the tune of $4.4 billion.