Coinbase Has ‘Structural Advantage’ Over Competitors, Cowen Analyst Says

Coinbase Global’s (COIN) security infrastructure and regulatory adherence give it a “structural advantage” over rival global crypto exchanges, Cowen equity research analyst Stephen Glagola said in a note to clients Thursday.

• Cowen initiated research coverage on Coinbase with an outperform rating and an $85 price target.
• The company's shares currently trade around $70 and have lost more than 70% in value this year as crypto and equity markets have weakened.
• The current structure of the exchange industry suggests the risk of competition driving fees lower in the near term is low because the platforms “also compete on security/trust of platform, access to assets, ease of use, customer support, and alternative products,” Glagola said in the note.
• Material fee compression is possible in the longer term as the industry matures, he said.
• Cowen estimates that Coinbase accounted for about 46% of U.S. regulated centralized exchange spot crypto volume as of 2021, up from 39% in 2020.
• Glagola said he expects the introduction of Coinbase's crypto derivatives in the U.S., assuming regulatory approval, to be a catalyst for growth along with the potential for “off-shore liquidity moving back to U.S.”
• Coinbase is the third-largest crypto exchange by volume worldwide, according to data from CoinMarketCap.

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