Crypto trading platform
will report its quarterly earnings results after Thursday’s market close. Recent euphoria around
Bitcoin
’s
acceptance by major institutions probably provided a boost to the company this year, but major threats to its business remain.
Coinbase is expected to post first-quarter earnings per share of $1.15 on revenue of $1.36 billion, according to analysts polled by FactSet. That would be above the $1.04 in earnings on $954 million in shares the company made in the fourth quarter of 2023.
In the first quarter of last year, Coinbase lost 34 cents per share on $773 million in revenue as the crypto industry still reeled from the bankruptcy of crypto exchange FTX.
Fidelity,
and other major firms launched the first Bitcoin exchange-traded funds in January, cheering traders who anticipated that the new funds would bring traditional financial advisors into crypto for the first time.
The euphoria provided a jolt to Bitcoin’s price. Bitcoin started the year at about $44,000 but surged as high as $73,000 in March. Coinbase and other crypto-linked stocks also benefited. So far this year, Coinbase shares have climbed about 17% to $204.
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Lately, inflation worries have brought token prices back to Earth along with those of other risky assets. On Wednesday, Bitcoin traded at about $56,000.
Despite the recent weakness, analysts have warmed to Coinbase. About a fifth of analysts tracked by FactSet rate the trading platform a Sell or Underweight versus the 41% of analysts who gave it that rating in January. Overall, analysts rate Coinbase a Hold with a price target of about $239.
Mizuho Securities, a consistent bear on the stock, in mid-April raised its price target to $145 from $84, while still rating it Underperform, citing strong trading volumes after the ETF launches.
“Although we are raising estimates amid a favorable near-term setup, our long-term fundamental concerns remain,” analysts led by Dan Dolev wrote. Among those issues are rising competition from low or no-cost stock trading platforms such as
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and Fidelity, which have bolstered their crypto trading capabilities.
Coinbase is also still under legal threat. The Securities and Exchange Commission last June sued the firm, accusing it of operating an unregistered stock exchange, which the company denies. A judge in March allowed most of the SEC’s case to move forward and the case will likely drag on for many more months, potentially dampening some investors’ interest in shares.
Coinbase’s near-term profits might rise and fall with crypto, but winning the legal battle is most crucial to the stock.
Write to Joe Light at joe.light@barrons.com
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Read More: Coinbase Reports Earnings Today. What to Expect.
