SUMMARY
- Coinbase’s Q3 net revenue fell below forecasts, though institutional interest in the stock is rising due to its increasing role in key equity indices, according to JMP.
- Analysts noted the upcoming U.S. presidential election could positively impact Coinbase and the crypto industry by potentially easing regulatory pressures.
Coinbase (COIN) shares experienced a decrease after the cryptocurrency exchange reported a top-line miss for the third quarter. In early trading on Thursday, the stock fell by 2%, settling at $207.50. The earnings report was released after U.S. markets closed on Wednesday, revealing a total net revenue of $1.1 billion. This figure was 3% below the company’s forecast and 5% below consensus estimates.
The revenue miss stemmed from lower transaction incomes and a drop in subscription and service revenues, concurring with KBW. Despite the disappointing top-line performance, the decline in operating costs helped to progress adjusted EBITDA, a vital profitability measurement. KBW keeps up a market performance rating on the stock, with a price target of $165. Whereas retail trading volumes surpassed expectations, they were balanced by a compression in the retail fee rate, leading to a frail outlook for the fourth quarter.
JMP analysts highlighted that the Coinbase administration remains committed to improving its product offerings, which is anticipated to drive mainstream selection in the future. Moreover, they noted that the upcoming U.S. presidential election is likely to serve as a positive catalyst for Coinbase and the broader crypto market. They expect more noteworthy clarity and consensus among administrators, which might benefit the industry as a whole.
Institutional interest in Coinbase is supposedly on the rise, as the company has become a more critical component of various stock indices. JMP has given Coinbase shares a market outperform rating, with a price target set at $320. Canaccord also recognized Coinbase’s endeavors to broaden its trade model amid the quarter, highlighting that the company continued to develop despite lower market volatility and trading volumes. The firm emphasized that more revenue is presently being generated from recurring sources, such as staking and custody services.
Looking ahead, analysts recommend that a potential alter in the regulatory scene following the U.S. election next week may serve as a bigger catalyst for Coinbase. A clearer regulatory system might result in the dismissal of the continuous Securities and Exchange Commission (SEC) case against Coinbase. Canaccord has allocated a buy rating on Coinbase stock, with a price target of $280. Generally, while the recent quarterly results were disappointing, the viewpoint for Coinbase appears to have potential as institutional interest develops and the regulatory environment advances.