Cryptocurrency exchange Coinbase (COIN) has “hidden value” in its Coinbase Ventures unit that investors have yet to fully appreciate, Owen Lau, an equity research analyst at Oppenheimer, said in a note to clients.
- Coinbase Ventures’ investments aren’t yet contributing financially to Coinbase, but are “strategically important” to the company because they support the broader crypto ecosystem and add insight to emerging technologies, Lau said.
- Oppenheimer estimates the fair value of Coinbase’s Venture portfolio is $6.6 billion. Coinbase had invested in over 250 companies through fourth-quarter 2021, with a carrying value of about $352 million at cost basis, the bank noted.
- “Our sensitivity analysis shows that the market value could go as high as $17.0B, assuming a 13% ownership stake,” Lau said. “Given the continuous capital influx to blockchain/digital assets, there is potential upside to our estimate.”
- Lau has an outperform recommendation and $377 price target on Coinbase’s stock. Near-term, the share price is likely to be dictated by the price of bitcoin along with macroeconomic pressures, he added.
- Coinbase shares are down about 39% year-to-date, trading at roughly $151/share.