Amid continued slowdown in cryptocurrency trading, Coinbase third-quarter earnings expected to reveal revenue decline.
Coinbase’s results, due out after the bell today, may show how the exchange responds to these pressures.
Coinbase third-quarter earnings to show revenue decline
Coinbase (COIN) will report third-quarter earnings on Wednesday, Analysts predict challenging financial times.
according to fact set The exchange’s revenue is expected to fall 13% from the second quarter, to $1.26 billion from $1.45 billion. Wall Street analysts attributed the downturn to lower spot trading volumes and fewer market catalysts driving investor activity..
Earnings per share (EPS) are expected to be $0.46, up from $0.14 in the second quarter, but still limited by weak industry-wide trading volumes.
on a client ReportBarclays analyst Benjamin Buddish noted that “trading volumes continued to be soft during the quarter, particularly at retail.” While maintaining an equal weight rating on Coinbase, Buddish raises stock price target to $175 from $169.
data Data from The Block shows that industry-wide transaction volume fell to US$3.3 trillion this quarter from US$3.92 trillion in the previous quarter.
Coinbase faces stiff competition as Crypto.com has become North America’s largest exchange by trading volume since July. Analysts say Crypto.com’s broader token offering may have lured users away from Coinbase.
The exchange’s rival Robinhood (HOOD) is also preparing to release third-quarter earnings after the bell on Wednesday.
Regulatory uncertainty hampers U.S. trading volumes
Coinbase also faces regulatory uncertainty related to the upcoming U.S. presidential election amid falling trading volumes.
Oppenheimer analysts emphasized that while North American trading volumes weakened, international markets showed resilience. Spot volumes outside North America increased 61% in the quarter, demonstrating global growth despite challenges in the U.S. market.
“Political uncertainty and lack of catalysts have negatively impacted Bitcoin trading volumes,” Oppenheimer analyst Owen Lau observed, highlighting the “bright spots” of international sales growth.
Regulatory unresolved issues, particularly regarding new U.S. cryptocurrency policies, could impact trading volumes on U.S. exchanges.
Oppenheimer expects Coinbase to post third-quarter revenue of $1.29 billion and earnings per share between $0.40 and $0.54. The firm has an “outperform” rating on Coinbase, The long-term price target for the next 12 to 18 months is $282.
These international trends represent both challenges and opportunities for Coinbase. Coinbase could solidify its market position in the U.S. amid stiff competition by expanding its product offerings or addressing the regulatory environment.
Ethereum decline affects staking revenue
In addition to transaction fees, Analysts expect Coinbase’s staking revenue to drop as Ethereum underperforms.
JPMorgan analyst Kenneth Worthington linked the drop in staking revenue to Ethereum (ETH)’s 24% drop from the second quarter, which has seen prices trade between $2,330 and $2,760 since August fluctuate between.
ETH’s underperformance has weakened overall demand for Coinbase’s staking service, which relies heavily on Ethereum’s stability. revenue growth in this field.
“Ethereum in particular underperformed, impacting Coinbase’s staking revenue in the third quarter,” Worthington commented. He pointed out that the decline in ETH’s market capitalization has put pressure on Coinbase’s subscription and service revenue.
Stake, a major revenue generator, saw positive momentum in the second quarter, growing by 17% due to an increase in USDC balances on the platform. However, Ethereum’s struggles this quarter have undermined Coinbase’s ability to leverage staking services.
JPMorgan maintained its neutral rating on Coinbase and raised its price target to $196 from $180. They expect third-quarter earnings per share in the range of $0.42 to $0.54, reflecting mixed revenue potential.
Even though Coinbase is up 30% year to date stock valuethe stock is still down 21% from its March peak of $279.71.