Coinbase (PIECE OF MONEY) provides a quarterly update on Thursday afternoon in what has been a tumultuous year for digital assets. As cryptocurrency prices rebounded and stabilized after their September tumble, analysts expect further declines in profits and sales for the largest publicly traded crypto exchange. COIN stock fell ahead of the results.
Coinbase stock has fallen 76% so far this year, while major cryptocurrencies Bitcoin and Ethereum have both fallen 60%. Meanwhile, Coinbase retail turnout dropped nearly 70% in the second trimester.
In mid-October, Coinbase and automated payments company Primer announced a strategic integration to bring crypto payment options to merchants around the world to help them turn around low user transaction volumes.
However, Compass Point analyst Chase White tempered expectations of a major rebound in retail trading volumes. He lowered his full-year estimates for 2022 and 2023 “significantly” in his pre-earnings research note in late October and cut his price target for COIN shares to $75 from $95.
Still, institutional adoption is on the risewhich is a positive indicator for the overall crypto space.
Coinbase lost $4.98 per share in the second quarter as sales fell to $808 million. That’s up from $6.42 in revenue on $2.2 billion in revenue the previous year.
For the third quarter, Wall Street expects losses of $2.38 per share against a profit of $1.62 last year. Revenue is expected to halve to $641 million.
Piece of money
COIN stock slid 1.8% to 59.61 on Thursday afternoon, falling intraday to its lowest level since late July. Coinbase is on track for its seventh consecutive decline.
The COIN stock often moves with Bitcoin. Bitcoin bounced above $20,000 in late October. The digital currency has fallen slightly, but still maintains this key level.
Coinbase stock went public in April 2021 via a direct offering. After hitting a record high of 429.54 on its first day of trading, COIN stock has been trending lower, especially since November 2021.
A return of Coinbase?
There are still bull cases for Coinbase. In mid-September, JP Morgan (JPM), analyst Kenneth Worthington noted that Coinbase has a “substantial revenue opportunity” thanks to rising interest rates. The revenue opportunity for Coinbase is greater than other financial institutions, due to “unique investments and idiosyncrasies with crypto accounts,” he wrote. Coinbase could keep almost all of its interest income, unlike some of its other peers that pass it on to customers, Worthington predicted.
The biggest opportunity for interest may come from the stablecoin venture with Circle, which oversees the USDC stablecoin. Worthington estimates this could represent a $700 million opportunity out of potential $1.2 billion in interest revenue for Coinabse in 2023.
You can follow Harrison Miller for more stock info and updates on Twitter. @IBD_Harrison
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