Coinbase’s shares experienced a notable increase of 12% on Friday, even as the cryptocurrency exchange reported earnings that fell short of analyst expectations for the fourth quarter. The mixed reactions from analysts highlight ongoing challenges in the sector while also acknowledging potential long-term growth opportunities.
In its earnings report, Coinbase disclosed net revenue of $1.71 billion, which was below the anticipated $1.81 billion. Additionally, the company reported an adjusted EBITDA of $566 million, missing the consensus estimate of approximately $653 million. Under generally accepted accounting principles (GAAP), Coinbase recorded a net loss of $667 million, significantly impacted by a $718 million unrealized loss on its cryptocurrency investment portfolio and a $395 million loss on strategic investments.
Barclays analyst Benjamin Budish characterized the fourth quarter results as disappointing, noting weak transaction and subscription revenues alongside higher-than-expected operating expenses. He revised his price target for Coinbase down to $149 from $258, emphasizing that trading activity, stablecoin-related interest income, and crypto asset prices remain critical to the company’s performance.
Despite the negative results, Budish identified some positive trends, such as an increase in Coinbase’s share of the USDC market cap and a growing subscriber base for its Coinbase One service. He also pointed out that the company’s share buybacks had effectively reduced the share count by approximately 8% from the previous quarter.
Mark Palmer from Benchmark offered a more optimistic perspective, maintaining a buy rating on Coinbase’s stock while lowering his price target from $421 to $267. Palmer highlighted the growth of Coinbase’s derivatives business, its expanding product offerings, and increasing stablecoin adoption as indicators of the company’s evolving and more resilient business model.
Owen Lau of Clear Street noted that Coinbase’s consumer monetization is under pressure, with the retail take rate declining from 1.43% in the third quarter to 1.31% in the fourth quarter. This decrease was attributed to a shift towards advanced trading tools and the Coinbase One subscription model, which lowered per-trade revenue. Nevertheless, Lau acknowledged stronger user engagement and cross-selling efforts that partially mitigated this decline. He adjusted his price target to $277 from $344, citing ongoing challenges in the crypto market, weak retail participation, and a more cautious macroeconomic environment.
Despite the disappointing earnings report, Coinbase reaffirmed its commitment to maintaining adjusted EBITDA positivity throughout various market cycles, supported by $14.1 billion in total available resources. The company’s management reiterated its strategy of continuing stock buybacks and accumulating Bitcoin using a portion of its operating income.
In related news, Ark Invest has continued its bullish trend in the cryptocurrency sector, purchasing an additional $18 million in crypto-related stocks, including investments in Robinhood and Bitmine Immersion Technologies. This reflects a growing interest in the convergence of traditional finance and cryptocurrency markets.
Despite a disappointing earnings report, Coinbase's stock surged as analysts provided mixed assessments. While some downgraded their price targets, others highlighted long-term growth potential.