Here’s why Coinbase’s soaring stock remains so polarizing

“Where bitcoin goes, the stock goes,” Bernstein’s Harshita Rawat wrote — “at least in the near-term.”

See more: Coinbase’s stock soars after crypto platform swings to profit, as ‘risk on’ activity resumes

Rawat highlighted 160% sequential growth in retail trading volumes during the fourth quarter, one factor behind the 45% sequential bump in revenue for the period.

“If the bull market on crypto continues, it is simply hard to not be bullish on Coinbase in the very near-term given the high beta to crypto asset prices, especially bitcoin,” she wrote.

That’s even as she believes Coinbase could prove a medium-term “net loser” of the recent launch of spot bitcoin
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exchange-traded funds, as the custodial fees for those are much smaller than Coinbase’s retail trading yields.

She rates the stock at market-perform with an $80 target price.

Needham analyst John Todaro noted that as with management at Robinhood Markets Inc.
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+3.01%,
executives at Coinbase “emphasized that bitcoin ETFs have been additive to their business and that they have not seen outflows from bitcoin trading as a result of the ETFs.”

Added Todaro: “While we are encouraged by this commentary, we note it is very difficult to parse out if trading activity is moving away from Coinbase to ETFs, thus we are taking [management] commentary with a grain of salt.”

Still, he cheered the “return of the retail trader,” as retail volume proved ”quick to bounce back” once crypto prices increased.

He has a buy rating on the stock and raised his target price to $220 from $180 Friday.

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Oppenheimer’s Owen Lau also maintained a bullish stance, writing that Coinbase is “coming out stronger on the other side of crypto winter and improving its long-term competitive position.”

He rates the stock at outperform with a $200 target price.

Patrick O’Shaughnessy of Raymond James, meanwhile, titled his note to clients: “Happy Days Are Here Again, At Least For Now.”

He noted that the company’s outlook was upbeat, but he also outlined four factors he thought investors had to believe in order to take a bullish view of the stock.

Those are that the company’s legal battle with the Securities and Exchange Commission “will prove to be a non-event,” that Coinbase will continue charging retail customers roughly 2% commissions indefinitely, that crypto will eventually “graduate from pretend money status to actual currency” and that a two-year stretch of declining user growth isn’t worrisome.

“We do not share such optimism,” he wrote, as he maintained his underperform stance.