Coinbase Global (COIN) experienced a rocky three months as trading volumes and revenue fell for a second straight quarter during what's being called a crypto winter. Shares of the crypto exchange rebounded from a loss in premarket trading to a gain of about 3% at the open after bitcoin prices jumped following the U.S. inflation report.
Wall Street analysts lowered expectations ahead of Coinbase’s second-quarter earnings report, although they weren’t quite ready to call the bottom for the shares as uncertainty lingers over the crypto and broader market.
“COIN’s 2Q22 report was most noteworthy for what it did not include,” BTIG analyst Mark Palmer told clients in a note, adding that investors had expressed concerns amid the company’s potential cash burn and loss of retail users. “The size of COIN’s cash burn during 2Q22 did not set off alarm bells,” Palmer wrote. BTIG reiterated a buy rating, lowering its price target to $220 from $290.
Coinbase’s current cash position of $6.2 billion may fall to about $5 billion by the end of 2023 even under current crypto market conditions, according to MoffettNathanson. “As a result, as long as the company makes no major changes to its operating activities (e.g., no significant M&A), Coinbase should have plenty of cash to withstand even a protracted crypto downturn,” analyst Lisa Ellis said in a note. She maintained an outperform rating and a $200 price target.
Coinbase may yet face some challenges in regard to customer activity under current macroeconomic conditions. The company, however, will be working to diversify its revenue base and hold the line during the crypto winter.
"We believe the crypto fallout in 1H22 has shaken out many tourists," Oppenheimer analyst Owen Lau said in a note to clients. "The remaining investors are long-term believers in the stock/digital assets, forming a strong base and are less sensitive to near term volume." The firm maintained an outperform rating and $108 price target, citing a longer-term outlook on Coinbase's Web 3 plans.
“Following a severe drop in asset prices, it is not surprising to see a bit of paralysis in customer engagement, particularly in trading as investors assess where we go from here,” JMP Securities' Devin Ryan told clients in a note. “Pinpointing the moment of inflection is difficult, but we continue to have conviction that Coinbase remains incredibly well positioned to benefit as the pendulum moves back into the middle, which we believe it inevitably will.” Ryan has a market outperform rating on Coinbase, and lowered the price target to $195 from $205.