Custody for Facebook's (FB) Novi a Win for Coinbase (COIN) - JMP

October 20, 2021 7:33 AM EDT
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JMP analyst Devin Ryan has weighed in to discuss yesterday’s news that Facebook (NASDAQ: FB) selected Coinbase (NASDAQ: COIN) as a custodian for its crypto project Novi.

The digital wallet will allow people to send and receive money abroad quickly and with no fees. Coinbase Custody will be engaged to support Novi.

Ryan, who rates Coin as Market Perform with a $330.00 per share price target, shared two key thoughts on the announcement.

  1. Novi adoption could represent an important catalyst for broader digital asset adoption over time and the expansion of the crypto economy,
  2. Another validation for Coinbase as a differentiated leader and partner in the development of the crypto economy.

“We continue to view Coinbase as a compelling story given that it has already achieved material scale yet we estimate it is still in its early innings of development and growth. Given the complex nature of the industry, we do not expect a linear path of growth for the stock, but we do see substantial optionality over time, particularly given our view that innovation will be tremendous and it is definitionally difficult to predict,” Ryan said in a client note.

The analyst has also discussed the recent Coinbase NFT marketplace, which has already attracted roughly 2.5 million sign-ups.

“The Novi announcement represents a nice example of how Coinbase is leveraging existing capabilities at scale, but we also remain quite bullish on additional product and service innovation from here, with the recent NFT announcement a good reminder of that..Coinbase aspires to grow well beyond its exchange and custody model, and with that said, NFTs represent both a rapidly growing market but also a natural extension for Coinbase. The NFT marketplace announcement was met with strong initial enthusiasm as the waitlist reached over a million users after just one day, and we note it has continued to grow over the past week,” the analyst added.

Shares of Coinbase closed at $305.63.

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