Coinbase stock forecast: Coinbase Global surpassed analysts’ expectations for earnings and sales in the third quarter but continues to see trade volume decline.
Investors are unimpressed. After-hours trading saw the stock fall more than 4% to $80.55 after climbing 8.7% during the regular session.
Coinbase (COIN) reported a one-cent loss per share in the third quarter, compared to the 55-cent loss projected by analysts, according to FactSet. Revenue was $674 million, compared to the average forecast of $651 million.
It was Coinbase’s sixth consecutive quarter of losses, as the company suffered in the aftermath of the crypto market crisis in 2022, which decreased trading volumes.
Coinbase’s profitability was aided in part by higher “take rates” paid to regular traders, according to Mizuho analyst Dan Dolev in a post-release earnings note. Rising fees have also aided profitability in previous quarters, but Dolev and other analysts say that the trend will not endure because of growing competition for traders from businesses such as Robinhood Markets (HOOD).
Nonetheless, Coinbase’s loss was substantially lower than the 42-cent loss per share in the second quarter. The firm lost $2.43 per share in the third quarter of last year as the crypto crisis deepened.
Importantly, ordinary investors are less interested in Coinbase and other trading platforms. Coinbase reported $76 billion in overall trade volume in the third quarter, up from $92 billion in the second quarter and $159 billion in the third quarter last year.
The business reported $289 million in transaction revenue in the quarter, as well as $105 million after the quarter ended in October. In the shareholder letter, Coinbase management stated that the October figure should not be extended.
There are reasons to believe that the low volumes and low prices that dominated the crypto markets this summer are behind the firm. Bitcoin’s price has grown 29% since the end of the third quarter, reaching almost $34,900. Volume on trading sites like Coinbase has also increased.
One of the motivations, according to Coinbase Chief Financial Officer Alesia Haas, is speculation about the eventual approval of a spot Bitcoin exchange-traded fund. While Haas declined to predict how long the trading uptick would remain, she did say other possible triggers on the horizon might continue to attract interest.
Coinbase has been battling authorities in addition to retaining traders’ enthusiasm for cryptocurrency. The Securities and Exchange Commission sued the firm in June, accusing it of operating an unregistered securities exchange, which it disputes.
In addition, Coinbase has spent millions of dollars on lobbying to persuade politicians to enact legislation that company officials say would give a clear route for crypto businesses to operate lawfully in the United States, perhaps leading to a more bullish Coinbase stock forecast. While some of the legislation has passed through House or Senate committees, policy analysts believe they have little prospect of becoming law very soon.
Legislation, according to Haas of the lawmaker’s legislative drive, takes time. We must be patient, she says, adding that she believes it will be a matter of “when,” not “if.”