Cryptocurrency exchange Coinbase (COIN) is poised to announce strong earnings and revenue growth in its upcoming fourth-quarter report, scheduled for release on Thursday after market close.
Analysts foresee a prosperous quarter for the crypto exchange, buoyed by increased trading activity as the broader market experienced a rally during the period.
“We expect Q4 to be a strong quarter for the company as volumes returned to the space and interest income held up,” commented John Todaro, an analyst at investment bank Needham, who holds a buy rating on the stock.
The surge in trading volume comes as no surprise, with the digital currency market witnessing a resurgence in prices during the fourth quarter, fueled by the approval of spot bitcoin exchange-traded funds (ETFs) for trading in the U.S.
This trend mirrors the performance of Coinbase’s peer, Robinhood, which reported a 10% increase in crypto revenue in the fourth quarter. Analysts anticipate a similar outcome for Coinbase, given that the majority of its revenue is generated from trading fees.
Chase White from Compass Point, who has a buy rating on the stock and expects $895 million in revenue with a $200 price target for 2024, anticipates Q4 to be the strongest in terms of revenue and adjusted EBITDA since Q1 2022.
According to FactSet consensus estimates, Coinbase’s revenue is expected to rise to $826.1 million from $674.1 million in the previous quarter. Trading volume is also projected to increase to $142.7 billion compared to $76 billion in Q3. Analysts predict fourth-quarter earnings per share of $0.02, up from a loss of $0.01 per share in the previous quarter.
However, analysts hold mixed views on the benefits of Coinbase’s involvement in spot bitcoin ETFs. While some see potential downsides in the future, others emphasize the broader positive impact beyond just bitcoin’s price.
Devin Ryan, Director of Financial Technology Research at Citizens JMP, highlighted the significant impact of Coinbase’s recently launched offshore derivatives exchange, indicating substantial potential due to the larger derivatives market compared to the spot market.
As investors await Coinbase’s earnings report, attention is also focused on expense guidance, a crucial metric as the company continues its investment initiatives.
In Thursday’s trading session, shares of the crypto exchange surged approximately 13%, in line with the broader rally in crypto-linked stocks as bitcoin surpassed the $51,000 mark.
