Markets
Coinbase and Robinhood: JMP Picks the Best Crypto Stocks to Buy
Bitcoin’s fourth halving occurred silently last month when block 840,000 was mined. Despite the official increase in scarcity, BTC prices have remained relatively stable. This stability could present new opportunities for potential crypto investors. Historically, halving events have been accompanied by price increases as the number of coins awarded for each block mined decreases.
However, the unregulated nature of the cryptocurrency market can be intimidating. However, this should not deter potential investors. Those who want to capitalize on the crypto market but are hesitant to purchase the coins directly can consider investing in crypto-related stocks. These shares are regulated, thus reducing the risk for investors while maintaining the quality of the investment.
Covering cryptocurrencies for investment bank JMP, 5-star analyst Devin Ryan delivers strong views on the best crypto stocks to buy in the current environment. Ryan looks at Coinbase (NASDAQ:COIN) and Robinhood (NASDAQ:HOOD), two prominent names in the world of crypto trading, and their opinions are worth taking a closer look at.
We used the TipRanks database to find out what the rest of the Street has to say about these two picks. Let’s dive.
Coinbase Global
We will start with Coinbase, one of the main digital cryptocurrency exchanges. The company operates an online platform and cryptocurrency wallet, accessible on both PCs and mobile devices, offering trading operations in most major cryptocurrencies. Users can buy, sell and trade Bitcoin, Ethereum, Dogecoin – 248 cryptocurrencies in total. Coinbase makes its app interface simple and intuitive to use, to make the trading process as easy as possible – and for application outside the digital currency niche.
The service has proven popular and Coinbase is available in over 100 countries. The app hosts approximately $312 billion in quarterly volume, and the company backs its trading with more than $348 billion in total listed assets. Coinbase is also working to improve trust in the crypto space and is committed to complying with best practices from traditional financial services companies.
Coinbase’s share price tends to track the price of Bitcoin, and when the leading cryptocurrency began to rise earlier this year, COIN shares also saw a rise. Increased investor interest in the crypto platform company has translated into solid gains for the stock, which is up about 220% over the past 12 months. The company now has a market value of nearly $49 billion.
The company’s financial results were solid in the first quarter of this year. Coinbase reported just over $1.6 billion in total revenue, beating forecast by $300 million and growing 112% year over year. Ultimately, Coinbase achieved an EPS of $4.40, a sharp turnaround from the 34 cent EPS net loss reported in 1Q23 – and beating the forecast by $3.33 per share.
Coinbase caught the attention of analyst Devin Ryan mainly for its growth potential. The analyst, ranked 21st overall by TipRanks, writes of the company: “While the growth from here is not linear, we think it is becoming more evident to the market that Coinbase is building one of the most holistic on-ramps for the economy. of digital assets and for virtually all types of users, including retail (for multiple use cases beyond commerce), institutions, merchants, developers (and more). Simply put, this business is evolving into much more than just a marketplace for buying and selling digital assets, which has been our consistent thesis.”
Looking ahead, Ryan goes on to describe what specifically encourages Coinbase shares at the moment, saying: “We think investors should size positions with a view around the stock as a higher risk proposition given the inherent volatility in the markets. of cryptography, and also the ongoing uncertainty surrounding regulatory and legislative matters. That said, we see the risk/reward opportunity as attractive…”
Taken together, these comments support Ryan’s Outperform (i.e. Buy) rating on Coinbase shares, and his $320 price target shows his confidence in a ~61% upside potential for the year ahead. (To see Ryan’s history, Click here)
Overall, Coinbase gets a Moderate Buy consensus rating from Wall Street analysts, based on 21 recent reviews that break down into 9 Buys, 9 Holds, and 3 Sells. Shares are trading for $199.17, and its $244.37 average price target suggests a one-year upside of approximately 23%. (To see Coinbase Stock Forecast)
Robinhood Markets
The second stock we’ll look at is online financial services company Robinhood. Robinhood has offered commission-free trading on its platform, in stocks, ETFs, IRAs – and in cryptocurrencies since 2022. Robinhood launched its mobile app in 2015 and quickly became popular among younger investors.
Robinhood offers a number of advantages for younger investors new to trading markets. The platform allows users to trade from as little as one dollar and also makes funds available through the Robinhood Gold Card or Crypto Wallet. All of this fuels Robinhood’s self-described mission to democratize finance for everyone. Some numbers show the company’s progress in this direction: It had 24 million customers funded as of April 30 and claims $123 billion in assets under custody.
The popularity of the Robinhood app and its popularity as a crypto trading platform is reflected in the company’s stock performance; over the past 12 months, shares are up about 111%. Stocks posted these gains despite choppy trading and a few missed sessions in recent weeks.
Turning to the company’s financial results, we see that the 1Q24 report, the most recent, presents several record numbers. Quarterly revenue was $618 million, up 40% year over year, for a company record. The end result was another record, with GAAP earnings per share reported at 18 cents per share. Revenues were $63 million above forecast and earnings per share exceeded by 12 cents per share. These numbers were reinforced by record net deposits of $11.2 billion.
The record performance and strong annual growth caused JMP’s Devin Ryan to take notice of Robinhood and take a more bullish stance than the Street overall.
“We believe Robinhood can continue to deliver stronger than appreciated growth and stronger than appreciated profitability, all supporting the valuation… With the reacceleration of revenue growth coupled with management’s focus on expenses, We estimate that the company should be able to deliver average earnings growth of 30%+ over the next few years, with significant headway before the business model reaches a more “mature” state. At the same time, Robinhood’s financial stability has never been better, with cash and investments exceeding $5 billion, approximately one-third of its entire market value,” Ryan opined.
In his own results, Ryan says: “Based on our growth projections as we look ahead to the next few years, we see the valuation as quite attractive…”
Quantifying his bullish stance, Ryan assigns an Outperform (i.e. Buy) rating to HOOD stock and sets a $30 price target that suggests a roughly 68% gain in the stock over the next year.
This is the optimistic position. The Street’s broader view puts a Hold on HOOD, based on 16 ratings that include 4 to buy, 8 to hold, and 4 to sell. Robinhood shares are selling for $17.90, and the average share price target of $20.14 implies 12.5% upside over 12 months. (To see Robinhood Stock Forecast)
To find good ideas for stock trading at attractive valuations, visit TipRanks’ Best stocks to buya tool that brings together all of TipRanks’ equity insights.
Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.