Coinbase Global (COIN) is scheduled to report second-quarter 2021 earnings on August 10.
The company is the leading global cryptocurrency trading platform with numerous innovative cryptocurrency products in its portfolio.
Over the past six months, shares of the company were down 21.3%, and are now trading above $258. Solid Q2 results might propel the stock price upward, so let’s take a closer look at what analysts on the Street are expecting.
Coin Q2 Expectations
For Q2, the Street expects Coinbase to report adjusted EPS of $2.26 and revenues of $1.71 billion.
Meanwhile, the Earnings Whisper number, or the Street’s unofficial view on earnings, stands at $2.40 per share. (See Coinbase Dividend Date and History on TipRanks)
Coinbase’s Prior Quarter Snapshot
In the last-reported first quarter, Coinbase delivered strong results, driven by a favorable crypto market environment. The company also witnessed growth across all key metrics.
The company reported revenues of $1.8 billion, higher than $190.6 million in the year-ago quarter. Analysts were expecting revenues of $1.8 billion.
Net income came in at $771.5 million in Q1 versus approximately $32 million in the year-ago quarter.
Factors to Note
Given the increased volatility in the crypto market, it will be interesting to see how this cryptocurrency exchange company will perform in its second quarter as a public company.
As crypto trading products are the primary source of Coinbase’s revenues and profits, it is very difficult to predict anything for this company. Despite this vulnerability, it is important for investors to take a note of few vital metrics, including verified users, retail monthly transacting users (MTUs), trading volume, and Assets on Platform.
At the end of Q1, Coinbase had more than 56 million verified users and 6.1 million retail monthly transacting users (MTUs).
Likewise, retail, institutional, and ecosystem partners are likely to have grown across both the metrics, driven by the company’s initiatives to increase awareness for its products.
Moreover, for Q2, management anticipates MTUs to be higher than in Q1. For FY21, the company expects MTUs to be in the range of 5.5 million to 9 million.
Coming to trading volume numbers, 39% of the company’s Q1 trading volume was made up of Bitcoin (BTC), while Ethereum and other crypto assets made up 21% and 40%, respectively.
Overall, the increasing interest of the institutional investors and growing demand for Ethereum 2.0 staking products are anticipated to have aided volume growth in the upcoming quarter. Also, growth in DeFi users could have aided trading volume growth.
For Q2, management expects total trading volume to be at least in line with the first quarter’s trading volume.
Notably, the company has been steadily expanding its product line. Though Bitcoin and Ethereum continue to account for a large chunk of the company’s Assets on Platform, other crypto-assets now account for 21% of Assets on Platform. The growing crypto asset portfolio is expected to have benefitted Coinbase’s upcoming results.
On a less positive note, increased competition from new entrants is likely to have been an overhang for the company. Also, operating expense is likely to have increased, impacting the bottom line figures.
The company said in a statement to shareholders that, “In Q2 2021, we expect approximately $35 million of one-time expenses related to the Company’s direct listing. Looking to full-year 2021, in order to scale our operations and to continue to drive product innovation, we expect our technology and development expenses and our general and administrative expenses to be between $1.3 billion to $1.6 billion, excluding stock-based compensation.”
Analyst Recommendations
Ahead of the second-quarter earnings announcement, Mizuho Securities analyst Dan Dolev reiterated a Neutral rating on the stock, but decreased the price target to $210.00 from $225.00. This implies an 18.7% downside potential to current levels.
Dolev expects the company to report total revenue of $1.065 billion in Q3, which represents a potential downside of 20-25%, versus the current consensus which stands at $1.3 billion.
The Wall Street community is cautiously optimistic about the stock with a Moderate Buy consensus rating based on 10 Buys, 2 Holds, and 1 Sell. The average COIN price target of $353.73 implies 37% upside potential from the current levels.
Coinbase scores a 7 of 10 from TipRanks’ Smart Score rating system, indicating that the stock is likely to perform in line with market averages.
Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
