Coinbase Expected To Post Strong Earnings As Trading Volume Hits Multi-Year High

Coinbase COIN is set to release its fourth-quarter earnings, with analysts predicting a substantial rise in revenue and profits.

What Happened: The cryptocurrency exchange is projected to report $1.8 billion in revenue, a significant jump from $1.26 billion in the previous quarter, according to FactSet estimates, Coindesk reported.

Earnings per share (EPS) are expected to climb to $1.99 from $0.41, reflecting a renewed wave of activity in the crypto sector.

A major factor behind this growth is the increase in trading volume, which analysts estimate reached $195.9 billion in Q4, the highest since late 2021.

This momentum has been largely fueled by a post-election surge in crypto market enthusiasm and an uptick in investor participation.

Analysts have mixed views on Coinbase's stock, with some maintaining an optimistic outlook while others remain cautious.

Citi analysts recently raised their price target for COIN from $275 to $350, citing the company's strong market positioning. They maintain a “buy” rating on the stock, seeing long-term potential in Coinbase's evolving business model.

However, Citi also forecasts Q4 revenue at $1.7 billion, slightly below the $1.8 billion consensus estimate.

Also Read: Bitcoin, XRP, Dogecoin Decline 2% On Hotter-Than-Expected Inflation Print

What Experts Are Saying: JPMorgan's Ken Worthington, while acknowledging the positive impact of the U.S. presidential election on the crypto market, remains neutral on Coinbase, expecting revenue to reach $1.77 billion for the quarter.

Despite a strong quarter, Coinbase faces challenges heading into 2025, as regulatory uncertainty and market conditions could impact growth.

Analysts at Citi predict that transaction revenue will rise 6% year-over-year, slightly higher than the market consensus of 3% growth.

However, they also warn that COIN stock could remain volatile, influenced by macro trends and shifting investor sentiment.

A key concern is Coinbase's reliance on trading fees, which still account for half of its total revenue. Retail traders, who typically generate the highest fees, have not returned at the same levels as in 2021, according to research firm Kaiko.

Their share of Coinbase's total trading volume has dropped from 40% in 2021 to just 18%, posing a challenge for the company's transaction-driven business model.

To diversify its revenue streams, analysts suggest Coinbase could expand into asset tokenization, blockchain-based financial services, and Web3 applications, which offer new growth opportunities beyond trading.

"In our view, the next evolution for Coinbase's growth trajectory will rely on utility… an area with many proofs-of-concepts, but perhaps waiting to be unlocked with clearer rules," Citi analysts noted.

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