Crypto exchange giant Coinbase (COIN) is anticipated to unveil robust earnings and revenue figures for the fourth quarter, buoyed by increased trading volume amidst a broader market uptick in late 2023.
Analysts project a bullish outlook for Coinbase’s fourth-quarter results, attributing the expected strength to a resurgence in crypto trading activity and sustained interest income. John Todaro, an analyst at investment bank Needham, predicts a strong performance for Q4, citing the return of trading volumes and stable interest income.
The surge in trading volume aligns with the recovery in cryptocurrency prices during the fourth quarter, notably boosted by the approval of spot bitcoin exchange-traded funds (ETFs) in the United States. This trend mirrors the positive earnings reported by Coinbase’s trading platform counterpart, Robinhood, which experienced a 10% increase in crypto revenue for the same period.
Chase White of Compass Point echoes this sentiment, anticipating Q4 to be Coinbase’s strongest quarter in terms of revenue and adjusted EBITDA since early 2022. FactSet consensus estimates predict a notable increase in revenue and trading volume compared to the previous quarter.
However, analysts express mixed opinions regarding the potential benefits of Coinbase’s involvement in spot bitcoin ETFs. While some view it positively, citing increased interest in the space and broader market impacts beyond bitcoin’s price, others raise concerns about the sustainability of ETF-related assets under management (AUM) and potential outflows.
Dan Dolev of Mizuho highlights the potential negative impact on Coinbase’s custodial services for spot bitcoin ETFs, particularly in light of outflows from Grayscale’s Bitcoin Trust (GBTC). Despite these concerns, John Todaro from Needham emphasizes Coinbase’s resilience in maintaining market share and suggests that trading fees are unlikely to decrease significantly.
Devin Ryan, Director of Financial Technology Research at Citizens JMP, underscores the significance of Coinbase’s offshore derivatives exchange in driving significant trading volume. He emphasizes the importance of monitoring expenses as Coinbase continues to invest in expanding its offerings.
Coinbase’s stock saw a notable uptick following the earnings announcement, reflecting investor confidence amidst the broader market rally and bitcoin’s surge past $51,000.
Overall, analysts anticipate Coinbase’s strong performance in Q4, fueled by increased trading activity and sustained interest in the crypto market, despite mixed sentiments regarding the impact of spot bitcoin ETFs on the company’s future prospects.
