Coinbase Global (COIN) missed third-quarter profit projections as trade volume declined 71% compared to the fourth quarter of 2021. Still, interest revenue from its exposure to the USDC stablecoin was a bright spot. The reaction on Wall Street was divided, but Owen Lau, an analyst at Oppenheimer, remains bullish.
Lau said to clients that COIN is more likely to create positive adjusted EBITDA (earnings before interest, taxes, depreciation and amortisation) in 2023, and it can diversify and generate non-trading revenue. Lau maintained his outperform rating and $107 price target on Coinbase shares, roughly quadrupling the current price of $57.
Wall Street continues to question Coinbase’s road to profitability, though.
JPMorgan analyst Kenneth Worthington said that with the fall in trading volume, it’s harder for Coinbase to get EBITDA-positive as it continues to invest in building out new goods and services, in part to support the expansion of the crypto ecosystem. The stock has a neutral rating and a price objective of $66 at JPMorgan.
Josepth Vafi, director of equity research at Canaccord Genuity, was a bit more optimistic, telling clients that Coinbase is “finding the right happy medium” as the cost structure must be handled. A stable cost lane seems the optimal balance for attaining a steady aim of competitive yet efficient development.
Revenue for the third quarter was $576 million, down from $803 million in the second quarter and $1.24 billion in the third quarter of the prior year. On an Ebitda basis, it lost $116 million in the most recent quarter, compared to a $151 million loss in the previous quarter and a profit of $618 million a year earlier.
Trading volume fell from $217 billion in the second quarter and $547 billion in last year’s fourth quarter to $159 billion.
The trading volume fell to $159 billion from $217 billion in the second quarter and $547 billion in Q4 2021.
However, subscription income increased from $147 million three months before $211 million. The main contribution to this increase was interest revenue, which came to Coinbase due to its exposure to USD coin (USDC) and interest generated on client fiat deposits.
Coinbase did not provide updated projections for the next year but stated that it is preparing cautiously and anticipating the present macroeconomic headwinds would stay and perhaps deepen.