Key Coinbase Takeaways:
- A market analyst from Monplanet Capital Management predicts Coinbase stock to rise in value to $316 per share.
- The expert see Coinbase growing its free cash inflow in the following years.
- The crypto market in general is expanding, which will benefit the exchange.
- Agreements with convertible noteholders facilitate the price increase.
YEREVAN (CoinChapter.com) – A market analyst at Monplanet Capital Management firm analyzed Coinbase’s future stock price. They concluded that the target price is $316, or 23% higher than the current value of $256 per share. The analyst based their prediction on several uplifting fundamentals.
Here are three takeaways from Monplanet’s Coinbase report.
#1 Expected growth of Coinbase’s free cash inflow
The analyst described a “best-case scenario,” where the sales estimates for the 2021-2023 period could come in at $6 billion. The Capital Management firm estimated Coinbase to have no debt by then and bring the FCF (free cash flow: the cash available for the company to repay creditors) to $1.7-2.7 billion.
Coinbase also reported tremendous growth of cash in hand. It increased by 311%, from $1.061 billion to more than $4.365 billion. The analyst expects that figure to grow and reach $6.39 billion in the year 2023. Given that the company’s current debt is around $2.5 billion, more than enough cash is in hand to repay it.
#2 Expansion of the crypto market
Even though the Covid-19 pandemic destabilized the financial market, experts have a positive outlook on the future of the crypto sector. According to estimates, the crypto market could display a Compound Annual Growth Rate (CAGR) of 11.2%.
Moreover, the analyst expects the crypto sector’s growing popularity to augment its expansion and its integration into the mainstream economy.
The simple and adaptable conditional strategy offered by cryptographic money has encouraged the Central Bank Digital Currency (CBDC) movement arrangements across the world.stated a study by Fortune Business Insights
Coinbase does business with volatile cryptocurrencies. As the exchange is highly dependent on the overall climate of the crypto market, its growth will benefit the company, bringing in more users and more clients.
#3 Convertible notes price
The Monplanet Capital Management analyst asserted that the convertible note agreements have an important role in the Coinbase stock valuation.
In detail, a convertible note is a form of an investment loan in the early stages of a company’s development. It is made to convert to ownership of stocks in the company once the loan matures.
Noteholders accepted to receive 0.50% per year and a conversion price of $370.45. This means that most convertible noteholders may believe that the fair value is close to $370.45.the analyst stated.
On May 18, 2021, Coinbase signed a purchase agreement with Goldman Sachs & Co. LLC and J.P. Morgan Securities LLC to issue and sell the Notes.
The Notes accrue interest of 0.50% per year payable semi-annually in arrears. The conversion rate for the Notes will initially be 2.6994 shares of the Class A Common Stock per $1,000 principal amount of the Notes, which is equivalent to an initial conversion price of approximately $370.45 per share of the Class A Common Stock.reads the prospectus of the agreement.
The analyst concluded his research with a positive outlook. They asserted that the Coinbase shares have upside potential. Moreover, they estimated the potential price target for the stock to rise 23 percent compared to the current pricing and stand at approximately $316.