On November 9th, Coinbase Global, Inc. (NASDAQ: COIN) announced its third quarter financial results. The company reported quarterly revenues of $1.31 billion in revenues, down 41% quarter over quarter. Gross profit saw the same fate, dropping from $1.89 billion last quarter to $1.11 billion this quarter. Operating profit saw a 66.2% quarter-over-quarter drop to $295.31 million.
The disappointing results were primarily a function of the company’s total trading volume and the number of active users dropping by 29% and 16% quarter over quarter respectively. Total trading volumes went from $462 billion on the platform at the end of the second quarter to $327 billion at the end of the third quarter, while monthly users went from 8.8 million to 7.4 million during the same time.
A number of analysts changed their 12-month price target, bringing the average to US$406.20 or 21% upside to the current stock price. Coinbase Global has 23 analysts covering the stock with 6 having strong buy ratings, 11 have buy ratings, 5 have hold ratings and a single analyst has a sell rating on the stock. The street high sits at US$600 from Moffettnathanson while the lowest comes in at US$275.
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In Canaccord’s third quarter review they reiterate their buy rating and raise their 12-month price to US$342 from US$325. They believe that the third quarter results will be a blip and recover swiftly in the fourth quarter, writing, “We like that Coinbase is aggressively adding new digital assets to its platform to further diversify its trading business away from Bitcoin and Ethereum.”
Canaccord points out that even with Coinbase’s quarterly results disappointing investors, they continue to make acquisitions and solidify its leading position. They specifically liked that Coinbase has added NFT’s and direct deposits to the suit of items.
For the results, Canaccord says that the third quarter results were a result of a slow start during the quarter due to low volatility and declining spot prices. They note that volatility is the key driver in Coinbase’s revenue as retail investors tend to make more trades when there is more volatility. Although this quarter was tough for Coinbase, Canaccord says that the company saw a 41% increase in subscription and services revenue.
Lastly, Canaccord says that the company continues to accelerate its new assets to buy on its platform. With Coinbase adding 30 new assets to trade, 19 assets for custody, bringing the total to 103 for trading and 158 for staking.
Information for this briefing was found via Sedar and Refinitiv. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
