Daily Stock Pick: September 15th, 2021

Stocks were flat to start the day amid escalating concerns around the effect of the spreading variant on the recovering economy.  We’ll have to wait and see what comes next as we round the corner into the back half of dismal September.  

The stock featured in today’s stock pick has been caught in a nasty sell-off, and it may be looking to bounce back. Continue reading to find out why and what to look out for. 

Since its IPO in April, Coinbase Global (COIN) can’t seem to find its footing.  The share price soared as high as $429 on its first day on the market, but over the past five months, it has whittled away at those gains and is currently trading below its initial reference price of $250.  

Coinbase stock has felt the pinch, especially in September, thanks to a string of unfortunate events that have negatively affected sentiment around the stock.  COIN’s share price is down more than 12% since last week when CEO Brian Armstrong came back with an angry response to what he perceives as a threat by the SEC.  The SEC sent a notice to the trading platform, blocking the launch of its Coinbase Lend program.  The platform’s latest endeavor would allow Coinbase account holders to lend Coinbase-issued stablecoin USD Coin (USDC) in exchange for a 4% yield.  Then on Monday, Coinbase irked investors further with plans for a $1.5 billion bond sale.

It’s easy to see why COIN, which, more often than not, has correlated with digital currency trends, is sitting out the crypto rally this time around.  Bitcoin price has risen 28% in the third quarter while Coinbase has declined by 4%.  According to Piper Sandler, analyst Richard Repetto thinks the stock is ready to bounce back.  

The analyst calculates an 86% correlation between the price of Bitcoin and Coinbase stock and thinks the vast chasm between the two is overdone.  He’s standing by his Overweight rating and $335 price target for COIN.

Growth for Coinbase has been explosive since it hit the public markets.  Revenue soared 11-fold last quarter, and its bottom line is growing even faster.  Coinbase has established itself as one of the pioneering players in the crypto revolution, with more than 68 million verified users.  Once it finally stabilizes, the sky’s the limit for COIN.  

Repetto isn’t the only analyst taking a bullish stance on Coinbase.  Of 24 polled analysts, 16 rate the stock a Buy, 7 rate is a Hold, and only one analyst says to Sell COIN.  A median 12-month price target of $336 represents a 37% upside from here. 

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