COIN stock is under pressure after Mizuho analyst said that the company’s NFT plans could backfire considering dwindling interest in the NFT market.
On Tuesday, April 5, Coinbase Global Inc (NASDAQ: COIN) stock tanked a sharp 7.5% closing the trading day at $177 levels. COIN stock reacted following the comments by Mizuho analyst Dan Dolev, who has put a red flag on Coinbase’s plan on launching an NFT marketplace.
Coinbase announced its plans to join the NFT bandwagon during the last month of March 2022. The non-fungible token (NFT) market skyrocketed last year clocking NFT sales of millions of dollars.
However, Mizuho analyst said that the interest in NFTs “appears to be dwindling”. Based on the internet searches, Dolev said that the hype around NFTs has slowed. The Mizuho analysts expect Coinbase to spend $300 million this year on its NFT project. This could put additional pressure as the analyst expects that Coinbase’s overall company profitability could face headwinds. In his recent analysis, Dolev wrote:
“Chasing NFTs as hype dwindles can be costly. Our analysis of internet searches shows interest in NFTs has dramatically declined from its highs earlier this year. In a year in which profitability may be challenged, we question the strategic rationale of chasing NFTs, especially as interest in NFTs appears to be dwindling”.
Mizuho Analyst Cuts Price Target for COIN Stock
The Mizuho analyst has cut down the price target for the COIN stock from $220 earlier to $190. This comes as Dolev lowers the revenue estimate for the COIN stock. The analyst notes that Coinbase’s NFT marketplace project will create mid-term pressure on average transaction revenue per. Furthermore, the analyst predicts a lower-than-expect volume during Q1 2022.
But not everyone on Wall Street is bearish about Coinbase’s NFT segment. Some analysts are also expecting strong revenue gains for the company. Citing a bullish case scenario, Needham said that Coinbase can see an additional $1.26 billion in revenue coming from its NFT business.
Furthermore, in January this year, baking giant Goldman Sachs said that Coinbase was still the blue-chip way to gain exposure to crypto.
The COIN stock has corrected 50% since its high in November 2021 just when the crypto market was at its peak. So far, in 2022, the COIN stock has corrected by a staggering 30%. Following strong correction, long-term investors can consider some bottom fishing in a staggered manner.
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