Can the Coinbase Stock Price Hit $505 as Citi Expects?

Coinbase stock price has never recovered since publishing weak financial results in July. After plunging by nearly 30% from its highest point this year, COIN remains in a bear market. Still, Wall Street analysts are bullish on the stock, with Citigroup expecting it to jump by 60% to $505.

Citi Analysts Expect the Coinbase Stock Price to Jump to $505

Most Wall Street analysts are highly bullish on the Coinbase stock price. Data compiled by Coinbase shows that the average target for the stock is $365, much higher than the current $318.

Citigroup analysts are the most bullish, with their Coinbase stock target being $505. The other optimists are from banks like Rosenblatt and JMP Securities.

Most Coinbase bulls point to the company’s market share in the crypto industry and the fact that it has diversified its business from focusing on transactions to other more reliable areas like custody, stablecoins, and payments.

Bullish COIN Stock Forecasts Find Headwinds

The bullish COIN stock price forecast found substantial headwinds after it published weak financial results. These results showed the company’s revenue growth stalled in the second quarter as costs rose.

Its transaction revenue retreated to $764 million in the second quarter from $780 million in the same quarter last year. This decline happened as Bitcoin and most altcoins remained in a tight range in Q2, often pushing investors and traders to the sidelines.

While Coinbase did not mention another reason, third-party data shows that Coinbase has lost its market share internationally to other companies like OKX, Bybit, and Crypto.com.

Coinbase’s efforts to diversify its business are paying off as the subscriptions and services segment’s revenue rose from $600 million to $655 million. This segment comprises services like stablecoins, staking rewards, interest, and custody solutions.

Coinbase’s stock price also dropped as its revenues showed that its costs continued rising in the second quarter. These costs jumped as the company hired more employees during the quarter.

COIN stock has other major headwinds that may affect its performance. For example, there are signs that other competitors are gaining market share because of their low transaction costs. A good example of these companies are Robinhood and Kraken, whose revenue grew by 98% and 14% in Q2.

Coinbase is also seen as a highly overvalued company. While its stock has crashed and valuation metrics have improved, it still has a forward price-to-earnings (PE) ratio of 54, higher than other faster-growing companies like NVIDIA.

Coinbase Stock Price Has Catalysts

Despite the ongoing challenges, COIN has several tailwinds that will boost its stock price. First, the company has a solid balance sheet with over $9 billion in cash and short-term investments. This cash and its equity value of over $80 billion means the firepower to acquire other companies, such as its buyout of Deribit.

Second, Coinbase recently relaunched its wallet application as it seeks to become a dominant player in the payment industry. A good execution may make it a major player as stablecoin payments gain market share.

Additionally, it owns Base, a layer-2 chain with over $6.5 billion in assets. It also andles billions in transactions each day. Coinbase were to offer a token sale, and based on other similar tokens, it would unlock billions of dollars in value. For example, Arbitrum, smaller than Base, has a fully diluted valuation of over $4 billion.

A technical analysis points to a strong Coinbase stock price surge. The chart below shows that the ongoing pullback is part of the formation of an inverse head-and-shoulders pattern, which often leads to more gains.

Therefore, the stock price will likely reverse and initially hit the year-to-date high of $443. A move above that price will confirm the bullish breakout and point to more upside, potentially to the Citi forecast of $505. A drop below the important support at $200 will invalidate the bullish outlook.