Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
Analyst sets a base case and an optimistic case scenario if Coinbase were to launch its own NFT marketplace and how much it could add to the company’s revenue.
Earlier this week, the news broke out that crypto exchange Coinbase is planning to launch its native NFT marketplace. However, there’s no confirmation regarding the same from Coinbase so far but analysts look excited.
In a note to clients on Thursday, March 17, Needham equity research analyst John Todaro said that the new NFT business could usher in a $1.26 billion opportunity in added revenue for Coinbase (NASDAQ: COIN). Citing the success of OpenSea, Torado is pretty “confident” about Coinbase’s NFT business idea. However, he remains anxious about the speed with which Coinbase can enter this space. The analyst further noted:
“We are positive on new verticals for COIN in NFTs and derivatives but we are not modeling in revenue from these segments until we see further clarity on the product offerings, fees, volume opportunities, etc. What we have seen so far has given us confidence in the potential product offering, and we are excited about a possible new spin on an NFT marketplace with Coinbase’s social NFT aspect. We also note that peer platforms, such as OpenSea, have received considerable negative attention from the NFT/crypto community in recent weeks from downtime/outage, phishing attacks, removing certain NFT series, etc. In our view, NFT buyers & sellers are very open to additional marketplace competitors to OpenSea; however we note that existing exchanges entering the NFT space have had difficulty gaining adoption relative to OpenSea.”
Coinbase Venturing into NFT Market
During his recent earnings call, Coinbase CEO Brian Armstrong said that the market was ripe for them to enter into NFTs. The company reportedly boasts a waiting list for 1 million customers for its NFT marketplace.
Well, the NFT market has also exploded over the last year with NFT sales hitting billions of dollars. Sales on popular platforms like OpenSea have touched the roof. Torado has also set a base case scenario wherein Coinbase’s NFT platform could have similar fees to its competitors at around 2.5%. The analyst believes that the Coinbase NFT marketplace could cater to a volume of $1.5 billion with a post-annual revenue of $450 million.
In a bull case scenario, Coinbase can push its fee to 3%, clocking a sale volume of $3.5 billion and a revenue of $1.26 billion. This could help alleviate the investors’ concern since the COIN stock has been on a free fall during the recent market correction.