Coinbase's price may fluctuate alongside the value of bitcoin in the short term, but Canaccord is betting on the future of blockchain technology and initiating coverage of the crypto exchange as a buy.
The largest U.S. cryptocurrency exchange's stock, which was trading above $232 on Wednesday morning, made its public debut in mid-April and fell sharply with the price of bitcoin in late May. Bitcoin is currently trading around $39,000 following a roller-coaster month of trading after its price drop almost a month ago.
Coinbase's revenue is largely driven by trading fees, 81% of which come from retail trading and 5% from institutional trading, according to Canaccord. It has the highest trading fees across crypto exchanges, the bank found.
Still, Canaccord said it's confident Coinbase's business will ultimately expand beyond retail trading and into emerging opportunities for the blockchain — which could include supporting new protocols beyond bitcoin and ethereum, decentralized finance and cloud solutions — and that crypto exchange will be a "super on-ramp" into that new world.