On Friday, H.C. Wainwright adjusted its price target for Coinbase (NASDAQ:COIN) Global Inc. (NASDAQ:COIN), bringing it down to $255 from the previous $265, while maintaining a Buy rating on the stock. This move comes after Coinbase reported a rare revenue shortfall for the third quarter of 2024 on October 30, attributed primarily to a 38 basis point sequential decrease in its average retail transaction take rate to 1.42%.
Despite the unexpected dip in retail spreads, which management linked to a shift toward more stablecoin pair trading that carries lower or no fees, the company's third-quarter performance was considered solid. This is particularly noteworthy given the context of reduced cryptocurrency prices and market volatility.
Coinbase's effective cost management resulted in operational expenses at the lower end of the forecasted range, and the company achieved positive adjusted EBITDA for the seventh consecutive quarter.
The fourth-quarter revenue and expense guidance provided by Coinbase was roughly in line with, or slightly below, consensus estimates before the earnings release. The company's shares are anticipated to decline in today's trading session due to the revenue miss and potential concerns about future retail spreads.
Nonetheless, the firm remains optimistic about the stock's prospects over the next year, citing a positive outlook for cryptocurrency prices and an improving regulatory climate in the United States.
Coinbase's leadership expressed confidence in the upcoming election's impact on the cryptocurrency sector. CEO Brian Armstrong commented on the potential for the U.S. to have the "most pro-crypto Congress ever" following the presidential election next week. In addition, Coinbase has launched a $1 billion share repurchase program, signaling its intention to return capital to shareholders going forward.
In other recent news, Coinbase Global Inc. reported strong earnings and revenue results despite facing market challenges. The company's Q3 2024 earnings call revealed a positive adjusted EBITDA for the seventh consecutive quarter and a positive net income for the fourth consecutive quarter.
Revenue from subscriptions and services is projected to surpass $2 billion in 2024, marking a successful shift from dependence on transaction fee revenue.
Monness, Crespi, and Hardt maintained a Buy rating on Coinbase stock, reflecting confidence in the company's strategic positioning within the cryptocurrency sector. The firm's analyst noted that despite a decrease in cryptocurrency prices and asset volatility, Coinbase's EBITDA slightly surpassed consensus.
The analyst also highlighted the company's $1 billion share buyback program, authorized by the board following a challenging third quarter.
In other company news, Coinbase has seen a significant increase in stablecoin transaction volumes and the USDC market cap has grown to $36 billion. The company is strategically focusing on driving revenue, increasing the utility of crypto, and achieving regulatory clarity.
However, it is cautious about potential Q4 headwinds, including a decline in Ethereum prices and lower interest rates. Despite these challenges, Coinbase remains optimistic about the future of crypto regulation and the potential for increased capital inflows with clearer guidelines.
InvestingPro Insights
Coinbase Global Inc. (NASDAQ:COIN) continues to demonstrate resilience in a volatile cryptocurrency market. According to InvestingPro data, the company's revenue growth remains robust, with a 90.33% increase over the last twelve months as of Q3 2024, reaching $5.00 billion. This aligns with the article's mention of solid performance despite reduced cryptocurrency prices and market volatility.
InvestingPro Tips highlight that analysts anticipate sales growth in the current year, which supports the company's positive outlook despite the recent revenue shortfall. Additionally, Coinbase's profitability over the last twelve months, as noted by another InvestingPro Tip, underscores the firm's ability to maintain positive financial results in challenging market conditions.
The stock's high return over the last year, with a 130.37% price total return, reflects investor confidence in Coinbase's long-term prospects. This impressive performance comes despite recent price volatility, as the stock has experienced a 12.58% decline in the past week.
For investors seeking a deeper understanding of Coinbase's financial health and market position, InvestingPro offers 11 additional tips, providing a comprehensive analysis to inform investment decisions.
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