Cryptocurrency platform Coinbase Global (NASDAQ: COIN) is set to report first quarter financial results after market close Thursday. Here is a look at what analysts expect and what could be next for the company.
Needham analyst John Todaro has a Buy rating and recently lowered the price target on Coinbase from $73 to $70.
HC Wainwright analyst Mike Colonnese recently initiated a Buy rating and price target of $75 ahead of the earnings report.
Earnings Estimates: For the first quarter, analysts are expecting Coinbase to report revenue of $649.4 million, according to data from Benzinga Pro. The revenue estimate would be down from last year’s total of $1.17 billion in the first quarter.
Analysts are expecting Coinbase to report a loss of $1.36 per share in the first quarter. In last year’s first quarter, Coinbase reported a loss of $1.98, missing analysts’ estimates of a profit of 17 cents per share.
Coinbase has missed earnings per share estimates from analysts in four straight quarters. The company has also missed revenue estimates from analysts in three of the last four quarters.
In its fourth quarter earnings report, Coinbase forecasted that subscription and services revenue would hit a range of $300 million to $325 million. The company said that transaction revenue was $120 million in the month of January 2023.
What Analysts Are Saying: Analysts have been mixed on Coinbase since the company reported fourth quarter financial results and many will come out with commentary after Thursday’s report. Several analysts have issued comments going into the earnings report.
Todaro sees flat volume in the first quarter ahead of Coinbase’s quarterly report and thinks interest income in the second quarter could fall for Coinbase.
First quarter volume could be flat on a quarter-over-quarter basis, which could be a positive after quarters of decline amidst the current cryptocurrency market, he explained.
According to Colonnese, “Coinbase is uniquely positioned to benefit from the large and rapidly growing global crypto economy given its trusted brand, easy to use products, and focus on compliance and regulation."
The analyst sees crypto winter nearing an end with the price of cryptocurrencies rising in 2023. Bitcoin (CRYPTO: BTC) could be entering a new bull cycle, according to the analyst.
Other Items to Watch: While most eyes will be on transaction revenue for cryptocurrency trading volume, one item to watch for investors could be its growing subscription and services revenue.
Subscription and services revenue totaled $283 million in the fourth quarter and was up 34% quarter-over-quarter. This came as transaction revenue was down 12% quarter-over-quarter in the fourth quarter.
For the full year, subscription and services revenue was $793 million, which beat a company estimate of $700 million and was up significantly from the $50 million reported in 2020.
Investors and analysts will likely be awaiting commentary from Coinbase on its ongoing battle against the SEC who served the company with a Wells Notice in March.
Coinbase has issued a response to the Wells Notice and continues to push on the SEC to tell it what needs to be done to avoid lawsuits. The company has argued that tokens on its platform are not securities and that new laws should be created by the SEC or a governing body to determine how securities laws should be applied to digital assets like cryptocurrencies.
In its fourth quarter earnings report, Coinbase anticipated regulation and believes it's "positioned to benefit."
Coinbase was recently the subject of an insider trading complaint from an investor as company executives with selling stock shortly after its direct listing in a move that came before shares dramatically fell over the next two years.
The story of the insider selling case has drawn attention from the financial community. “The Black Swan” author Nassim Nicholas Taleb took to Twitter to share his commentary on Coinbase.
“You get rich by selling a story and transfer the downside to suckers,” Taleb tweeted.
While Coinbase won’t likely comment on ongoing litigation against them, it could be interesting to see if they allude to it at all or anyone asks about it during the question and answer portion of the earnings call.
Price Action: Coinbase shares are up 1% to $49.05 on Thursday versus a 52-Week trading range of $31.55 to $132.72.
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