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The Coinbase cryptocurrency exchange beat second-quarter guidance, but a lukewarm outlook could weigh on equities.
Vladyslav Yushynov / Dreamstime
Coinbase
Global beat Wall Street’s sales and profit guidance in the second quarter, as trading volume and trading revenue continued to grow. But the stock was down after office hours, reflecting the company’s mixed outlook in the third quarter.
Coinbase (ticker: COIN) easily exceeded consensus estimates for both sales and profits. Total revenue of $ 2.2 billion exceeds forecast by $ 1.85 billion. Adjusted earnings before interest, taxes, depreciation and amortization amounted to $ 1.15 billion, beating estimates by $ 854 million, according to FactSet.
Coinbase’s diluted earnings per share of $ 6.42 also exceeded the Wall Street consensus forecast for EPS of $ 2.82.
The shares were trading down 1% at $ 267 after-hours, after falling 3.9% in regular session.
The largest publicly traded crypto exchange reported that trading volume and trading income continue to gain momentum. Monthly transaction users jumped to 8.8 million from 6.1 million in the first quarter. The volume of transactions increased from $ 335 billion to $ 462 billion.
The value of assets on Coinbase’s platform, however, declined from $ 223 billion to $ 180 billion, reflecting the decline in Bitcoin prices during the quarter. The company said that “despite the price movements, we saw billions of dollars in net asset entries and new customers added throughout the second quarter.”
But the outlook for Coinbase could weigh on the title. Trade volume was low in July as Bitcoin prices collapsed from the spring. August shows improvements in volume, supported by the recent rally in Bitcoin and other cryptos, but remains down from the start of the year, the company said. Therefore, Coinbase expects monthly users and trading volume to be lower in the third quarter compared to the June quarter.
Mizuho’s Dan Dolev maintained a neutral note on the action, noting that his results from here are literally a “draw.”
Coinbase’s retail transaction volume of $ 145 billion was up 21% from the first quarter, while institutional volume rose 47% to $ 317 billion. But the company’s forecast for monthly trading users for its entire 2021 year was slightly lower than its first-quarter forecast. Coinbase now expects a range of 5.5 to 8 million monthly users, reducing its upper estimate to half a million users.
“With August average daily volumes 80% higher than July, the excitement around the stock over the past week is somewhat understandable,” writes Dolev. “However, given that volatility can fade as quickly as it presents itself, Coinbase’s outlook for the year remains somewhat of a draw.”
Coinbase says it is gaining traction with retail traders who “deepen their engagement” on the platform by staking their digital tokens to earn a reward or return. More than 9,000 financial institutions now use Coinbase, the company said, for its “deep pools of liquidity” and range of services. The company said that in recent months it has formed partnerships with funders like Tesla CEO (TSLA) Elon Musk as well as a banking company.
PNC Financial Services Group
(PNC), Third Point LLC (Dan Loeb’s hedge fund) and
WisdomTree Investments
(WETF).
Some analysts remained bullish on the Coinbase title. BTIG’s Mark Palmer reiterated a buy rating and a goal of $ 500. Coinbase sees the volume of Ethereum increase, linked to the growth of decentralized financial networks and non-fungible tokens on this blockchain, notes Palmer. And he likes the fact that Coinbase is reducing its reliance on retail as it develops institutional services.
Everything indicates that crypto is gaining ground in the investment world. But Coinbase is still a game on Bitcoin and other crypto assets, which can be influenced as much by regulatory policies in Washington and other countries as the overall demand for “risky assets” and currencies and alternative assets. .
Whether Coinbase stock investors will benefit from this remains to be seen.
Write to Daren Fonda at [email protected]
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