JPMorgan Analyst Voices Concerns Over Coinbase’s Limited Transparency Regarding Its ETF Business

Coinbase’s Fourth-Quarter Earnings Applauded, but J.P. Morgan Analyst Raises Concerns Over Lack of Transparency in ETF Business

Despite Coinbase’s robust fourth-quarter earnings, propelled in part by the launch of ten spot Bitcoin exchange-traded funds (ETFs), J.P. Morgan analyst Kenneth Worthington remains skeptical about the true impact of these funds on the company’s earnings. While Coinbase highlighted its participation in the U.S. spot Bitcoin ETF as positive, Worthington criticized the lack of clarity surrounding the business, particularly the custodial services for eight of the ten bitcoin ETFs.

In a note, Worthington expressed concerns about the insufficient insight into the economics of arrangements with issuers. He emphasized the need for more detailed information, given the media attention and market anticipation for spot Bitcoin ETFs, to assess the true monetization impact and determine if it outweighs potential losses in spot markets.

Despite this skepticism, Coinbase exceeded Wall Street’s Q4 estimates, leading to a surge in its stock value. Analysts adjusted their ratings and price targets accordingly, with some upgrading their outlook on the stock. However, Worthington, who recently upgraded his stance on Coinbase due to higher digital asset prices, maintained a neutral rating and set a 12-month price target of $95, one of the lowest among Wall Street analysts.