Financial stocks are facing challenges following the federal government shutdown that took effect on Wednesday, a situation many investors had anticipated given the ongoing stalemate between Republicans and Democrats. As the major indexes, including the S&P 500, Dow Jones Industrial Average, and Nasdaq Composite, initially opened lower, they showed some recovery throughout the trading day. Interestingly, market activity has turned some investor focus towards gold futures and Bitcoin, with the latter rising by 3%.
The implications of a financial shutdown can be severe for financial stocks, particularly as more individuals struggle to meet their mortgage, auto, and credit card obligations. However, amid this turmoil, one stock that stands out is Coinbase Global (COIN), which has garnered positive attention due to the current circumstances.
Coinbase Global operates as one of the leading cryptocurrency exchanges, providing a platform for users worldwide to trade Bitcoin, Ethereum, and various other cryptocurrencies. The company services over 100 countries and boasts an impressive $425 billion in assets on its platform, supported by a quarterly trading volume of $237 billion.
The growth trajectory of Coinbase is notable, with net revenue reaching $1.42 billion in the second quarter, reflecting an increase from $1.38 billion in the same period last year. More strikingly, net income surged to $1.43 billion, a significant leap from just $36 million a year prior. Over the last three years, Coinbase has experienced an extraordinary revenue increase of nearly 3,000%, and net income has skyrocketed by 200%.
Analyst sentiments toward Coinbase stock remain robust. Out of 34 analysts covering the stock, half have issued strong buy or buy ratings, while 15 have assigned hold ratings. The consensus price target stands at $371, suggesting a potential 7% upside in the short term, with the most optimistic analyst setting a target of $510—indicating a remarkable 43% upside.
Coinbase’s business model remains appealing. The company recently introduced a Coinbase One Basic subscription plan for $5 per month, which offers zero-fee trades, rewards, and added benefits. This strategic move mirrors the successful premium subscription model employed by Robinhood Markets, which has seen its stock soar by 271% this year.
While it is not implied that Coinbase will replicate those gains, the membership offering combined with an uptick in cryptocurrency trading during the government shutdown presents a favorable outlook for Coinbase stock. As uncertainty looms in the financial sector, Coinbase could prove to be a prudent option for investors looking to safeguard their portfolios amidst these challenging times.