Analyst breaks down weakness in Coinbase stock

Investing.com -- Coinbase shares have lost roughly 13% value since it reported fourth-quarter results, though the earnings were strong, Mizuho attributed increased competition in USDC stablecoin distribution part of the weakness, following Binance’s new partnership with Circle.

The brokerage noted that Coinbase’s Q4 stablecoin revenue declined 9% sequentially, missing estimates despite a 10% rise in USDC market cap.

The company cited "the impact of new USDC ecosystem participants" in its shareholder letter, which Mizuho believes could signal growing competition from Binance.

While the Binance-Circle partnership may weigh on Coinbase’s near-term stablecoin revenue, Mizuho expects the company to remain a long-term beneficiary of USDC adoption. The firm lowered its price target to $280 from $290, maintaining a Neutral rating.

“While it may be a near-term ding to the story that the COIN/Circle JV is non-exclusive in order to promote the broader USDC ecosystem, we view COIN as a net beneficiary of USDC adoption medium-term,” analyst at Mizuho said.

USDC adoption can be driven by new stablecoin legislation, expanding stablecoin use cases, and the distribution power of COIN and Binance. “We believe that COIN, which earns high margins on USDC, is a good proxy to play the theme of stablecoin growth”

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