Coinbase has recently unveiled key insights into its user base and interactions with government entities, with their Transparency Report spanning from January 1 to September 30 of the current year.
This report provides a window into the platform’s rapid growth, demonstrating the requests for user information made by governments and law enforcement agencies. Notably, Coinbase, a major player in the cryptocurrency sphere, has seen a 27% increase in information requests compared to 2020, totaling 5,562 such requests.
The lion’s share of these inquiries, roughly 84%, came from the United States, the United Kingdom, or Germany, with the US accounting for 2,727 requests alone. These requests are typically associated with investigations into criminal activities. As part of this process, Coinbase usually discloses information such as user names, IP addresses used for login, payment details, and more.
Coinbase price crash
Despite Coinbase’s substantial user base and the apparent surge in information requests, their share price has experienced a rollercoaster ride. In November, it soared to over $365 before beginning a steep descent, closing at $243.35 on the most recent Friday. Coinbase’s fortunes are closely linked to the crypto market, as the bulk of their revenue stems from commissions on cryptocurrency transactions. During the third quarter, Coinbase reported revenue of $1.3 billion, a notable drop from the $2 billion earned in the second quarter. This fluctuation in cryptocurrency prices leads to an equally volatile turnover at Coinbase.
Nonetheless, Coinbase remains optimistic about its future in the crypto sector. The company is poised to venture into the NFT (non-fungible token) realm, with a product announcement that has already attracted 2.6 million registrations on a waiting list.
Risks
However, Coinbase shares do not come without their own set of risks. A potential further crash in cryptocurrency prices looms as a key threat, as Coinbase thrives when the crypto market surges, especially during periods of rapid price increases and influxes of new participants. Regulatory concerns also pose challenges; in September, Coinbase had to halt the launch of a new service that involved paying interest for locking and lending certain cryptocurrencies due to regulatory uncertainties.
Buy rating
For investors, the outlook on Coinbase shares appears mostly positive, with most firms recommending buying the stock. Needham sets a price target of $420, which represents a nearly 73% increase from the current price. J.P. Morgan projects a price target of $447, Goldman Sachs envisions $387, and Mizuho Securities forecasts Coinbase rising to $300.
Given the close correlation between Coinbase’s share price and the cryptocurrency market, investors also have the option to buy Bitcoin directly, offering a more direct exposure to the cryptocurrency sector.
