Wall Street analysts predict a decline in revenue for Coinbase, a leading cryptocurrency exchange, when it reports its third-quarter earnings. This decline is attributed to a slowdown in trading volume and lower staking revenue.
Trading Volume Slowdown
Analysts expect a 13% decrease in Coinbase’s third-quarter revenue, reaching $1.26 billion compared to $1.45 billion in the prior quarter. This slowdown is industry-wide, with data showing a decrease in total trading volume across all crypto exchanges from $3.92 trillion in Q2 to $3.3 trillion in Q3. Crypto.com, a competitor of Coinbase, has surpassed Coinbase as the exchange with the highest trading volume in North America. This might be due to Crypto.com offering a wider variety of tokens. Regulatory uncertainty surrounding the upcoming US presidential election is also believed to be a factor contributing to lower trading volumes on US exchanges.
Lower Staking Revenue
J.P. Morgan analysts anticipate lower revenue from Coinbase’s staking services due to the underperformance of Ether (ETH) in Q3. Ether’s price has fallen roughly 24% compared to Q2, trading in a range of $2,330 to $2,760 since August. This decline in Ether’s market cap is expected to negatively impact Coinbase’s staking revenue and overall subscription and services revenue.
Overall Outlook
Despite the projected decline in revenue, Coinbase’s stock price is up nearly 30% year-to-date. However, the stock is currently trading 21% below its peak of $279.71 reached in March.
Analyst Opinions
Analysts have mixed views on Coinbase’s future performance. Barclays analyst Benjamin Buddish maintains an “equal weight” rating on the stock but lowered his EPS estimate for Q3. Oppenheimer holds an “outperform” rating on Coinbase with a price target of $282 for the next 12-18 months. J.P. Morgan has a neutral rating on the stock but raised its price target to $196.