Mizuho has faulted Coinbase’s plans to roll out a non-fungible token (NFT) marketplace. The crypto exchange giant planned to roll out the NFT this year, but it has received a lot of criticism so far. Mizuho’s analyst, Dan Dolev, pointed out that the NFT marketplace seems to be regressing.
Profitability In NFTs Will Fall This Year
Doley presented an analysis of searches that showed that the previous hype around the NFTs has dwindled. According to him, the slow nature of the market means that Coinbase could likely spend more than $300 million to roll out the NFT business, but its overall profitability may be far lower due to the slow interest in the no-fungible market space.
“In a year in which profitability may be challenged, we question the strategic rationale of chasing NFTs,” he says.
Doley pointed out that the new NFT marketplace has led to medium-term pressure on average transaction revenue, which has lowered the expected Q1 volume in 2022. The market has not improved, ad Doley believes the slow trend could continue until the end of the year.
Others On Wall Street Expect Strong Revenue Gains
Mizuho is one of the few analysts that are predicting a bearish outlook for Coinbase in the NFT space. Some others o Wall Street have placed high expectations for revenue gains. In January, Goldman Sachs stated that Coinbase was still the blue-chip way for investors looking to gain crypto exposure. And recently, Needham estimated that Coinbase could add up to $1.26 billion in revenue when it launches the NFT marketplace.
Coinbase lost 5.6% of its share value while Bitcoin’s price was up over the past 24 hours. Coinbase announced its plans to enter the NFT space last month after the market skyrocketed in 2021.
The COIN stock has corrected 50% since its record price in November 2021 when the crypto market was at its peak. This year, the COIN stock has lost roughly 30% of its value at the beginning of the year, and Dolev’s prediction is based on these statistics ad other related indices.
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