FxNews—Analysts on Wall Street predict a continued decrease in the trading volume of cryptocurrencies on Coinbase in the third quarter. This is partly due to a lack of new developments in the cryptocurrency market and the uncertainty surrounding regulations as the presidential election approaches.
Coinbase Revenue Expected to Drop 13% in Third Quarter
Based on FactSet’s estimates, Coinbase’s revenues are expected to drop by about 13% in the third quarter to $1.26 billion from $1.45 billion in the previous quarter. Earnings per share (EPS) are projected to rise to $0.46 from $0.14 in the second quarter.
Benjamin Buddish, an analyst at Barclays, noted that the decrease in transaction revenues, especially from retail customers, has contributed significantly to this decline. He maintains a neutral stance on Coinbase’s shares and has adjusted the stock’s price target to $175 from $169 while reducing the EPS forecast to $1.05 from $1.62 for the quarter.
Industry-Wide Crypto Trading Slump Hits $3.3 Trillion
This trend of reduced trading volumes is not unique to Coinbase but reflects a broader industry pattern. Data from The Block indicates that around $3.3 trillion was traded across all cryptocurrency platforms during the third quarter, down from $3.92 trillion in the prior quarter. Robinhood, a competitor, is also scheduled to report its third-quarter earnings soon.
Further data showed that since July, Crypto.com has become the leading exchange in North America, surpassing Coinbase in trading volumes due to its broader range of token offerings.
Oppenheimer Sees Global Surge While U.S. Trading Declines
The anticipation of the U.S. presidential election results and the overall regulatory uncertainties are believed to have dampened trading activity in the U.S. However, Oppenheimer pointed out that trading volumes have surged by 61% outside North America, highlighting international markets as a key growth area.
Oppenheimer analysts also mentioned that these factors hurt Bitcoin while noting the global market as a positive development.
The investment bank projects that Coinbase’s revenue for the third quarter will be $1.29 billion, with an EPS of $0.40. It has given Coinbase a positive outlook and a target price of $282 for the next 12 to 18 months.
Lower Ether Prices Hit Coinbase Staking Income
Another negative for Coinbase’s earnings has been the lower income from staking services, primarily due to a significant drop in the value of ether, which fell by about 24% from the second quarter. Ether has been trading between $2,330 and $2,760 since August, decreasing from the higher range observed between April and June.
Despite these challenges, subscription and service revenues were positive, growing by 17% from the first to the second quarter, driven by higher USDC balances and market capitalization on the platform.
Coinbase’s shares have increased nearly 30% since the beginning of the year, though they have fallen by 21% from their peak in March. The stock is currently trading at $221.97.
J.J Edwards is a finance expert with 15+ years in forex, hedge funds, trading systems, and market analysis.
