Analysts are predicting a significant drop in Coinbase’s earnings for the second quarter due to a slowdown in trading volume. Estimates from FactSet suggest that overall revenue could decrease to $1.37 billion, with earnings-per-share expected to be $0.94. This marks a decrease from the previous quarter’s revenue of $1.64 billion and earnings-per-share of $4.40.
The U.S. election is also expected to play a role in shaping the stock’s performance. One analyst pointed out that the election could be a significant catalyst for Coinbase. However, there is uncertainty surrounding how the election outcome could impact the digital asset market as a whole.
J.P. Morgan analysts have expressed a neutral outlook on Coinbase, with a price target of $171 by the end of the year. They predict earnings-per-share of $0.30 and revenue of $1.36 billion. Similarly, Barclays analysts have adjusted their price target down to $196 and rate Coinbase as underweight. They expect revenue of $1.432 billion and earnings-per-share of $1.79 for the second quarter.
Barclays has looked at retail trading data from Robinhood to support their predictions. The data suggests that trading activity has softened in the first two months of the quarter, with a 35% decline in crypto retail trading volumes compared to the first quarter. This could indicate a similar decrease in Coinbase’s retail volumes.
Oppenheimer, on the other hand, has a more optimistic outlook, suggesting that the upcoming election could act as a positive catalyst for Coinbase’s stock. They believe that if former President Donald Trump is re-elected, Coinbase would benefit the most. Trump’s recent appearance at a Bitcoin conference and his crypto-friendly promises have added a political undertone to the digital asset market.
However, Oppenheimer also warns of a potential “hype die down” for Base, Coinbase’s Layer-2 scaling solution for Ethereum. They predict that revenue generated through Base could decrease to $20 million in the second quarter. JP Morgan analysts have also noted a mellowing in activity on the Base network, despite increased profitability following Ethereum’s London Upgrade.
As the market prepares for Coinbase’s earnings report, investors are closely watching how trading volume, transaction revenue, and political factors will impact the company’s performance. The outcome of the U.S. election, as well as developments in the digital asset market, could play a significant role in shaping Coinbase’s future trajectory.