Dan Dolev( based at Mizuho) expressed skepticism about Coinbase entering the NFT business market at this time, when the number of NFT searches on the Internet is going down.
Cryptocurrency exchange Coinbase (COIN) announced plans to issue NFT this year, which received some skepticism from Mizuho's analyst as he suggested that the NFT's heat is showing signs of diminishing.
In his customer note, Dan Dolev analyzed some of the evidence that NFT-related searches on the internet are declining. He estimated that Coinbase could spend $300 million this year on its NFT business while the company's total profits are struggling with rising operating costs. "In a year that is unlikely to be profitable, we wonder about the motives of the NFT pursuit strategy, especially as interest in the sector is waning," Dovle said.
Based on Q1 volume and medium-term pressure on lower-than-expected average transaction revenue per user because the NFT market is new, Dovle lowered its revenue estimate for Coinbase. The investment bank maintained a neutral recommendation on Coinbase, but the expected price still dropped from $220 to $190.
Despite Dan Dolev's downward forecast of the NFT segment on Coinbase, many Wall Street investors still expect strong growth from the project. Needham estimates that if prices rise, CoinBase will rake in $1.26 billion in revenue through its NFT business. In January, Goldman Sachs said CoinBase remains the "blue chip way" for investors who want to access cryptocurrencies.
