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Court Ruling on Ripple's XRP Boosts Coinbase Prospects; Needham Raises Target to $120

In light of the recent court ruling concerning Ripple's XRP token, Coinbase sees an increased potential, according to a research report by Needham.

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Coinbase logo

Implications of the XRP Court Ruling for Coinbase

The recent US district court verdict stating Ripple's XRP token should not be regarded as a security when sold via exchanges or programmatic sales has set a precedent. This is especially beneficial for Coinbase (COIN), as it implies that token sales through exchanges, at least for XRP, did not contravene securities laws. This analysis was provided by broker Needham in a report published on Friday.

Reduced Regulatory Pressure and Increased Share Price

Analysts John Todaro and Daniel Lehmann believe that this outcome could relieve some of the regulatory pressure on the stock, which is a significant weight on the share price. Needham has upheld its buy rating on Coinbase shares and elevated its price target from $70 to $120. Despite this optimistic outlook, Coinbase shares saw a slight dip of 1% in premarket trading on Friday, standing at $105.96. Nonetheless, the stock closed 25% higher on Thursday, following the Ripple court decision.

Strengthened Confidence in the Crypto Ecosystem

Recent Bitcoin (BTC) exchange-traded-fund (ETF) applications from notable traditional finance institutions using Coinbase's services give further assurance of extensive support for the crypto ecosystem and Coinbase. Needham's report indicated a modest increase in its Q2 2023 earnings predictions for the crypto exchange. However, they also warned that a continued decrease in retail trading could lead to disappointing volumes for the quarter.

Contrasting Viewpoints on Coin Base's Future

Despite Needham's optimism, German investment bank Berenberg had a different take. They argued that the rally in Coinbase shares following the court's decision was not justified. This contrasting view serves as a reminder of the varied opinions surrounding the future of Coinbase.