Coinbase Global Inc (Nasdaq: COIN) gained more than 7% on Wednesday after the company reported a surge in second-quarter profits during a particularly volatile period in the cryptocurrency market.

On Tuesday, Coinbase reported an adjusted EPS of $3.45 on revenue of $2.23 billion. Both numbers beat consensus analyst estimates of $2.33 and $1.78 billion, respectively. Revenue was up more than tenfold from a year ago.

Bitcoin (CRYPTO: BTC) prices fell about 41% during the second quarter, but Coinbase generated $1.9 billion in transaction revenue from crypto trading. Monthly transacting users grew 44% to 8.8 million in the quarter. Trading volume was up 38% to $462 billion.

Coinbase didn’t release official guidance, but the company did say trading volume has been trending lower in the third quarter.

Monetization Opportunities: Wedbush analyst Moshe Katri said investors should expect Coinbase shares to remain volatile, but there’s plenty of potential long-term upside.

“We see material monetization opportunities at COIN’s 2-sided platforms, providing strong earnings power for the next 3-5 years, which is yet to be captured by the Street,” Katri wrote.

Rosenblatt Securities analyst Sean Horgan said Coinbase’s digital wallet focus is a plus for investors.

“One thing we take away from this call is that COIN is more focused on being a digital wallet, offering a full suite of products to retain its users and monetize over time (a sentiment we strongly agree with),” Horgan wrote.

Growth Unsustainable? Piper Sandler analyst Richard Repetto said Coinbase’s second-quarter growth may be cyclical, but it’s impressive nonetheless.

“Bottomline, while it is still early and transaction revenues dominate their top line today, COIN moved forward in its vision to be the hub for crypto economy activity & took early steps to diversify their crypto-related revenues in the future,” Repetto wrote.

Raymond James analyst Patrick O'Shaughnessy said Coinbase’s second quarter was impressive, but there are still key risks for investors.

“We stand by our thesis calling for long-term, substantial pricing compression as we view the transaction business to essentially be a commodity service and we see an average retail fee commission of 1.26% in 2Q21 as unsustainable,” O'Shaughnessy wrote.

Ratings And Price Targets:

• Wedbush has an Outperform rating and a $300 target.
• Piper Sandler has an Overweight rating and a $335 target.
• Raymond James has an Underperform rating.
• Rosenblatt Securities has a Buy rating and a $420 target.