Piper Sandler says Coinbase could capitalize on FTX chapter, sees shares greater than doubling
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Piper Sandler is reaffirming its bullish outlook on Coinbase even amid chaos within the cryptocurrency house given the fallout at FTX. “We imagine COIN has a really robust money place and should even capitalize on the FTX chapter upheaval over the long run,” analyst Richard Repetto wrote in a Friday be aware. The agency reiterated its chubby ranking and $100 value goal on shares of the crypto alternate. The value goal implies that Coinbase might surge 120% from the place it presently trades. The inventory has plunged greater than 80% 12 months thus far. Nonetheless, although Piper Sandler thinks Coinbase will outperform, it does see the necessity for extra aggressive headcount discount going ahead to handle bills and maintain shareholder worth if an prolonged “crypto winter” outcomes from the FTX fallout. Headcount trim The corporate has a a lot bigger headcount than opponents resembling Robinhood. “At YE2021, COIN reported a headcount of three,730 — not far off from eBroker peer Robinhood (HOOD) which reported ~3,800 workers at YE2021,” mentioned Repetto. “Nonetheless, regardless of an 18% (1,100 worker) discount in pressure (RIF) in June, COIN’s headcount has nonetheless elevated ~26% YTD to 4,706 (at 3Q22 finish) as a consequence of aggressive intra-quarter hiring in 2Q22.” He additionally famous that earlier within the 12 months, Robinhood aggressively lowered its worker headcount by 37% to about 2,400, which is about half of Coinbase’s worker roster. Coinbase is on observe to satisfy its aim of an adjusted earnings lack of lower than $500 million for the total 12 months 2022. Alternatively, Robinhood reached profitability earlier than anticipated due to aggressive value slicing, which Coinbase could need to contemplate, Repetto famous. “COIN has argued that its elevated adjusted EBITDA “profitability” in 2021 warrants extra tolerance of the losses skilled in 2022,” he mentioned. “Nonetheless, with the FTX chapter driving incremental crypto headwinds, we imagine value reductions to be a extra viable & maybe extra acceptable technique.” Crypto winter contingency Nonetheless, indicators level to the present crypto winter being close to an ending level that might assist enhance Coinbase. “Utilizing historical past as a information and ignoring macroeconomic (rates of interest), regulatory, geopolitical components, we may very well be close to a backside on this crypto winter,” mentioned Repetto. “And whereas the impression on crypto costs from potential chapter liquidations (e.g. FTX, blockfi, and many others.) might weigh on investor sentiment and adoption curves for a while, the potential for a near-term FED pivot might ship crypto costs larger (i.e. threat on asset rally) which might possible be a optimistic for COIN’s buying and selling volumes,” he added. And, if the crypto winter just isn’t over quickly, Piper Sandler famous that Coinbase CFO Alesia Haas mentioned the corporate has contingency plans in place to climate the storm.
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