On Wednesday, the crypto sphere went into meltdown over the LUNA/UST debacle after the stablecoin TerraUSD de-pegged from the U.S. dollar and sent the ecosystem into a vicious downward spiral.
The most prominent representative of the ecosystem in the public markets, Coinbase (COIN) stock was also taking a beating. But the heavy bleeding here was due to the leading crypto exchange’s disappointing quarterly results. While the losses across the board accelerated in Wednesday’s crypto bloodbath, the market had already been showing bearish signs and these were reflected in Coinbase’s performance.
In Q1, revenue dropped by 27% year-over-year to $1.16 billion, coming in some distance below the $1.50 billion the analysts had predicted. The dwindling revenue came off the back of diminishing trading volumes. These fell to $309 billion in the quarter, from $547 billion in the prior quarter and $335 billion in the same period a year ago. Monthly transacting users also dropped – from 11.4 million in the December quarter to 9.2 million, also coming in shy of the 9.5 million expected by Wall Street.
There was a big miss on the bottom-line, too, as the net loss reached $430 million, or EPS of -$1.98. Analysts were looking for EPS of -$0.01.
And to top it all off, Coinbase expects Q2’s total trading volume and monthly transacting users will be lower than Q1’s haul.
Like so many growth names, Coinbase stock’s descent has been acute; the shares now sit 84% below the November highs.
But not everything is doom and gloom. JMP analyst Devin Ryan acknowledges the current difficult environment, however, he sees Coinbase ploughing ahead regardless.
“Ultimately,” said the 5-star analyst, “while the market backdrop has presented a challenge to start the year, we remain bullish on the long-term outlook for Coinbase given our ongoing expectation that the crypto economy will continue to develop at a rapid pace (driving the addressable market higher), adoption trends will remain healthy across customer segments, and Coinbase can remain an intermediary around access, product, and service for each. With $6B in cash, shares are currently trading at ~2.1x our 2023 revenue estimate, which we believe represents a particularly compelling value if our thesis plays out around market expansion.”
To this end, Ryan sticks with an Outperform (i.e. Buy) rating, although the price target is lowered from from $394 to $250. No need to get too despondent; the new figure still implies shares will climb 345% higher in the year ahead. (To watch Ryan’s track record, click here)
Ryan’s objective is still a bullish one but it does not stand out on Wall Street; the average target clocks in at $228.25, suggesting shares have room for 304% growth in the year ahead. Overall, based on 14 Buys, 3 Holds and 2 Sells, the analyst consensus rates this stock a Moderate Buy. (See Coinbase stock forecast on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
