Bank of America: Coinbase Revenue Diversification to Accelerate in 2022 and Beyond

Analyst at bank upgrades crypto company to buy rating citing its new or upcoming staking, NFT and DeFi offerings

article-image

Source: Nasdaq

share

key takeaways

  • Bank of America projects Coinbase’s subscription and services revenue to reach 16% in 2023, compared to 4% of total revenue in 2020
  • User-created metaverses will be the future of social networks, Coinbase Chief Product Officer Surojit Chatterjee wrote in a Dec. 30 blog post

Bank of America has changed Coinbase’s rating from neutral to buy due to the company’s increasing signs of revenue diversification beyond retail crypto trading.

Jason Kupferberg, a research analyst at the bank, said in a research note that he expects the company’s revenue diversification trend to accelerate in 2022 and beyond. He maintained its price target at $340.

Coinbase’s subscription and services revenue was 12% of its total net revenue in the third quarter of 2021, which was up from 4% in 2020, Kupferberg wrote. Bank of America expects that number to rise to 16% by next year, he added.  

Staking, NFT and decentralized finance (DeFi) products will be among the offerings driving Coinbase’s revenue diversification trend, Kupferberg wrote.

Coinbase revealed in October that it would launch an NFT marketplace allowing users to purchase, mint, showcase and discover the crypto assets. Kupferberg said that the offering is expected to launch this year.

NFTs will become the next evolution of users’ digital identity and passport to the metaverse, Coinbase Chief Product Officer Surojit Chatterjee wrote in a Dec. 30 blog post

“Users will come together in small and diverse communities based on types of NFTs they own,” Chatterjee wrote. “User created metaverses will be the future of social networks and will start threatening the advertising driven centralized versions of social networks of today.”

Coinbase also began allowing customers last month to earn DeFi yield on Dai, a stablecoin designed to be pegged to the US Dollar.

“In our view, scaling of these non-trading revenue streams could also catalyze increased interest in the stock among institutional investors,” Kupferberg explained. “While uncertainty around regulation remains an ongoing potential risk, we continue to believe that COIN’s technology, innovation and brand are positive differentiators as more consumers and institutions engage with various parts of the crypto/digital asset ecosystem.”

Crypto is on pace to hit a billion users in the next five years, Coinbase President and Chief Operations Officer Emilie Choi said last month during a webinar at the Bloomberg Financial Innovation Summit.

Choi added that Coinbase would look to buy “incredible companies” that it sees in the crypto space.


Don’t miss the next big story – join our free daily newsletter.

Tags

Upcoming Events

HYATT REGENCY SALT LAKE CITY

TUES, OCT. 8, 2024

Guided by the expertise of Blockworks Research Analysts team, this one day event will feature senior leaders, entrepreneurs, and developers from across the crypto industry. Attendees will have the opportunity to participate in an immersive experience to explore the latest trends, […]

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

hivemapper.jpeg

Research

We believe crypto market participants overlook Hivemapper’s fundamental potential due to a poor understanding of both the niche map data market and Hivemapper’s positioning relative to incumbents. Hivemapper’s token model catalyzes both a cost and product advantage via unmatched map freshness and near real-time accuracy, which is its wedge into a market characterized by stale data and high data collection costs. Its current and potential future product suite may represent one of the strongest possibilities for PMF in crypto today.

article-image

👨‍⚖️ SBF’s courtroom sequel: Plus, Coinbase’s legal loss was DeFi’s gain

article-image

Public mining companies have been acquiring sites, refreshing machine fleets and diversifying business models in preparation for the event

article-image

Exploit shows centralization can sometimes be an asset

article-image

The Fidelity Ethereum Fund, like other proposed ETH ETFs, seeks to stake a portion of its assets, according to the firm’s Wednesday registration statement

article-image

The DAO first voted on enabling SAFE transfers over a year ago