Coinbase (COIN) is set to release its fourth-quarter earnings after the bell on Thursday, and analysts are predicting strong revenue numbers for the popular crypto exchange. With trading volume picking up in the final days of the year, experts are expecting a robust quarter for Coinbase.
According to FactSet consensus estimates, Coinbase’s revenue is expected to increase to $826.1 million from $674.1 million in the previous quarter. This growth is also expected to be reflected in trading volume and earnings per share (EPS).
The recent rally in the broader market has contributed to the expected strong quarter for Coinbase. Investment bank Needham’s analyst John Todaro, who has a buy rating on the stock, believes that the company will see a boost in revenue due to the return of trading volumes and steady interest income.
The approval of spot bitcoin (BTC) exchange-traded funds (ETFs) in the U.S. has also played a role in the increased trading volume. This trend is evident in the earnings of Coinbase’s trading platform peer, Robinhood, which reported a 10% increase in crypto revenue in the fourth quarter. Analysts predict a similar result for Coinbase, as the majority of its revenue comes from trading fees.
Compass Point’s Chase White, who has a buy rating and a $200 price target for 2024, expects the fourth quarter to be the strongest in terms of revenue and adjusted EBITDA since the first quarter of 2022.
FactSet consensus estimates also suggest a positive outlook for Coinbase, with revenue expected to reach $826.1 million and trading volume to increase to $142.7 billion in the fourth quarter, compared to $674.1 million and $76 billion, respectively, in the previous quarter. Analysts also anticipate a positive EPS of $0.02, compared to a loss of $0.01 per share in the previous quarter.
Despite the positive expectations for the fourth quarter, analysts have mixed opinions about the long-term benefits of Coinbase’s involvement in spot bitcoin ETFs. One analyst believes that the company’s custodial service for eight of the ten spot bitcoin ETFs could have a negative impact in the future.
Mizuho analyst Dan Dolev, who has an underweight rating and a $60 price target for 2024, notes that outflows from ETFs, driven by Grayscale’s Bitcoin Trust (GBTC), have outpaced the inflows for the funds that Coinbase provides custodial services for. This has resulted in a decline in Coinbase’s ETF-related assets under management (AUM). Additionally, spot volumes on the exchange have slowed down after the initial excitement surrounding the ETF launch.
On the other hand, some analysts believe that the increased adoption of spot bitcoin ETFs could drive higher spot trading volumes for Coinbase in the future. However, the impact of this remains to be seen.
In summary, analysts are bullish about Coinbase’s fourth-quarter earnings, with expectations of strong revenue and trading volume. However, there are mixed opinions about the long-term effects of the company’s involvement in spot bitcoin ETFs. Investors will have to wait for the earnings report to see the actual impact on the underlying assets.
Source:
– CoinDesk. Read More