Cryptocurrency trading platform Coinbase Global is scheduled to report its quarterly results after the market closes on Thursday.Recent excitement surrounding Bitcoin
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Although acceptance by major institutions has probably been a boost for the company this year, major threats to its business remain.
Coinbase is expected to report first-quarter earnings of $1.15 per share and revenue of $1.36 billion, according to analysts surveyed by FactSet. This is higher than the $1.04 profit the company earned on $954 million in stock in the fourth quarter of 2023.
In the first quarter of last year, while the crypto industry was still reeling from the bankruptcy of cryptocurrency exchange FTX, Coinbase suffered a loss of 34 cents per share on revenue of $773 million.
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Fidelity, Invesco and other major companies launched the first Bitcoin exchange-traded funds in January, to the delight of traders who expected the new funds to be traditional financial advisers' first foray into cryptocurrencies.
This euphoria sent shockwaves through the price of Bitcoin. Bitcoin has been around $44,000 since the beginning of the year, but it rose to $73,000 in March. Coinbase and other crypto stocks also benefited. So far this year, Coinbase stock is up about 17% to $204.
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Recently, inflation concerns have brought the price of the token back to earth along with the prices of other risk assets. On Wednesday, Bitcoin traded around $56,000.
Despite recent weakness, analysts are positive about Coinbase. Roughly one-fifth of analysts tracked by FactSet rate the trading platform as a “sell” or “underweight,” compared to 41 who gave the same rating in January. It is compared with %. Overall, analysts rate Coinbase a Hold, with a price target of approximately $239.
Mizuho Securities has always maintained a bearish stance on the stock price, but in mid-April it raised its price target from $84 to $145 due to strong trading volume after the ETF was launched. It was still rated as underperforming.
Analysts led by Dan Dreb said: “While we have raised our expectations given the positive near-term outlook, fundamental long-term concerns remain.” Those issues include increased competition from low-cost or free stock trading platforms such as Robinhood Markets.
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Fidelity has enhanced its cryptocurrency trading capabilities.
Coinbase also remains under legal threat. Last June, the Securities and Exchange Commission accused the company of operating an unregistered securities exchange, a charge the company denies. A judge allowed most of the SEC's case to move forward in March, but the case could drag on for several more months and could dampen some investors' interest in the stock.
Coinbase's short-term profits may rise or fall depending on the cryptocurrency, but winning the legal battle is paramount to the stock price.
Email Joe Light at joe.light@barrons.com.
