Coinbase, the largest publicly traded cryptocurrency exchange, recently saw its stock price drop following a weaker-than-expected third-quarter earnings report. Despite this, H.C. Wainwright analyst Mike Colonese remains optimistic about the company’s future prospects and continues to recommend buying the stock.
The earnings report, released on Oct. 30, revealed a top-line miss for Coinbase, which Colonese described as uncharacteristic. This miss was primarily attributed to lower cryptocurrency prices during the quarter. However, Colonese believes that overall, the company had a solid performance in Q3, 2024. He highlighted positive aspects such as expense controls and revenue diversification as contributing factors to this assessment.
Looking ahead, the next 12 months are anticipated to bring a bullish outlook for cryptocurrency prices. Regulatory clarity is also expected to act as a catalyst for potential upside in the sector. Coinbase’s management has expressed optimism regarding the upcoming election and its implications for the crypto industry. CEO Brian Armstrong believes that the U.S. will have the most pro-crypto Congress ever, regardless of the election outcome. Additionally, Coinbase recently announced a $1 billion share repurchase program, signaling its intention to return capital to shareholders in the future.
Despite revising their revenue estimates for Coinbase, with projections of $5.45 billion for 2024 and $5.37 billion for 2025, H.C. Wainwright analysts maintain a buy rating for the stock. They have set a price target of $255, reflecting the revised revenue estimates.
It is important to note that risks to the buy rating and price target include factors such as concentration of retail trading revenue, fluctuations in cryptocurrency prices, and regulatory uncertainty. These elements could potentially impact Coinbase’s financial performance and stock valuation in the future.
In conclusion, while Coinbase may have experienced a revenue miss in the third quarter, analysts like Mike Colonese at H.C. Wainwright see long-term potential in the company. With a positive outlook for cryptocurrency prices and strategic initiatives in place, Coinbase continues to be a stock worth considering for investors looking to gain exposure to the digital asset market.
