Coinbase, a popular crypto exchange, reported third-quarter net revenue that fell short of expectations. This led to a 2% drop in the company’s stock price to $207.50 in early trading on Thursday. Despite total net revenue of $1.1 billion being 3% below forecasts and 5% below consensus estimates, the company managed to offset the revenue miss with reduced operating expenses, resulting in a better adjusted EBITDA figure.
KBW, an investment bank, stated that the revenue miss was due to lower transaction revenues and a decrease in subscription and services revenues. However, the bank remains optimistic, maintaining a market perform rating on the stock with a $165 price target. Retail trading volumes were higher than expected, but this increase was offset by a compression in the retail fee rate. Fourth-quarter commentary was also deemed weak by KBW.
JMP, another analyst firm, highlighted that institutional interest in Coinbase is on the rise as it becomes a more significant component of various stock indices. The upcoming U.S. presidential election is expected to be a positive catalyst for both Coinbase and the broader crypto market. The analysts anticipate greater clarity and consensus among legislators post-election, which could benefit the industry as a whole.
Canaccord, a brokerage firm, praised Coinbase for continuing to grow its business model in the face of lower market volatility and trading volumes. The company is generating more revenue from recurring sources like staking and custody. Canaccord also pointed out that a potential change in the regulatory regime following the election could have a significant impact. A clearer regulatory framework might lead to the dismissal of the current SEC case against Coinbase.
Overall, analysts have varying opinions on Coinbase’s performance and future prospects. While some remain cautiously optimistic, others see potential for growth and positive developments in the near future. The upcoming U.S. presidential election is expected to play a crucial role in shaping the regulatory environment for Coinbase and the wider crypto industry. Investors will be watching closely to see how these factors unfold in the coming months.