Cryptocurrency company Coinbase Global COIN could show how the approval of Bitcoin BTC/USD and Ethereum ETH ETFs in 2024 has impacted demand for the top two cryptocurrencies when it reports second-quarter financial results on Thursday after market close.
Earnings Estimates: Analysts expect Coinbase to report second-quarter revenue of $1.4 billion according to data from Benzinga Pro.
The company reported $707.9 million in revenue in last year's second quarter. Coinbase has beaten analysts' estimates for revenue in six straight quarters.
Analysts expect the company to report second-quarter earnings per share of 93 cents compared to a loss of 42 cents per share in last year's second quarter.
Coinbase has reported a profit in the last two straight quarters with $1.65 per share and 51 cents per share reported in the first quarter and fourth quarters respectively.
The company has beaten analysts' estimates for earnings per share in five straight quarters.
What Analysts Are Saying: The month of May was a positive for cryptocurrency stocks but was sandwiched between the months of April and June that saw a contraction, JPMorgan analyst Kenneth Worthington said in a new investor note.
The analyst said data suggests that the total cryptocurrency market capitalization dropped 14% year-over-year in the second quarter.
"We model transaction revenue of ~$720mn with spot retail and institutional fee rates of 160bps and 3bps, respectively," Worthington said.
The analyst reiterated a Neutral rating and raised the price target from $171 to $181.
A new model from Worthington models share mix increasingly going to lower fee rates and institutional volumes with the approval of cryptocurrency ETFs.
"We estimate the velocity of spot trading slowed materially as well, falling well below its quarterly average over the past ~5 years."
Coinbase revenue is set to benefit from the cryptoecosystem seeing a "material participation rally," the analyst said.
"We see Coinbase as both a leading driver and beneficiary of the cryptocurrency economy, and we previously underestimated the strength of the U.S. spot Bitcoin ETFs in its early days as a key catalyst for the crypto industry."
Here are other analyst ratings on Coinbase and their price targets:
- Citigroup: Upgraded from Neutral to Buy, price target raised from $260 to $345
- Needham: Buy rating, $260 price target
- Goldman Sachs: Neutral rating, price target lowered from $255 to $215
- Barclays: Underperform rating, price target lowered from $204 to $196
Key Items to Watch: Commentary from Coinbase on the Bitcoin and Ethereum ETFs will likely be one of the most watched items, along with the potential revenue impact from being the custodian for many of the funds.
Coinbase serves as the custodian for eight of the nine approved Ethereum ETFs.
While Coinbase relied on transaction revenue in its early days, a shift to subscription and services revenue has been a key focus for improving financials. Subscription and service revenue were $511 million in the first quarter, which beat previous guidance from the company.
Guidance from the company calls for second-quarter subscription and services revenue to be in a range of $525 million to $600 million.
Bitcoin and Ethereum continue to lead the way in trading volume and represent a large portion of Coinbase's volume and transaction revenue. The split of the two cryptos and other cryptos could be a gauge at how meme coins and other cryptos outside the top two are faring.
Coinbase's Layer 2 platform Base was a key highlight in the first quarter with a reported 8x increase in developer activity. Worthington said Base saw activity mellow in the second quarter. The analyst expects Base to have around $20 million in net fees in the second quarter.
COIN Price Action: Coinbase shares trade at $232.41 on Wednesday versus a 52-week trading range of $69.63 to $284.48. Coinbase shares are up 136% over the last year, outperforming a one-year gain of 128% for Bitcoin. The leading cryptocurrency has outperformed the performance of Coinbase year-to-date at +50.6% versus +34.6% respectively.
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© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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