Shares of Coinbase fell after the company reported weaker-than-expected third-quarter earnings; however, H.C. Wainwright analyst Mike Colonese has reaffirmed a buy rating on the stock.
Coinbase, the largest publicly traded cryptocurrency exchange, released its third-quarter earnings, which featured an “uncharacteristic top-line miss,” according to Colonese. He indicated that this shortfall may affect the company’s shares in the near term. The revenue miss was primarily attributed to lower cryptocurrency prices during the quarter, but overall, Colonese described the results as a solid performance for Q3 2024.
Positive highlights for Coinbase included effective expense management and efforts toward revenue diversification. Looking ahead, the next 12 months are viewed favorably for cryptocurrency prices, with regulatory clarity expected to serve as a potential catalyst for growth.
“We were encouraged to hear management’s positive outlook on the upcoming election and its implications for the crypto sector,” Colonese noted. CEO Brian Armstrong expressed confidence that the U.S. will see the “most pro-crypto Congress ever,” regardless of the outcome of next week’s presidential election. Additionally, Coinbase has initiated a $1 billion share repurchase program, indicating its commitment to returning capital to shareholders.
Colonese revised his price target for Coinbase to $255, down from $295, reflecting updated revenue projections for 2025. H.C. Wainwright has also adjusted its revenue estimates for the company, now forecasting $5.45 billion for 2024 (down from $5.67 billion) and $5.37 billion for 2025 (down from $6.25 billion).
In the third quarter, Coinbase reported total revenues of $1.21 billion, representing a 17% decline quarter-over-quarter but an 86% increase year-over-year, slightly missing FactSet estimates of $1.26 billion.
The risks to H.C. Wainwright’s buy rating and $255 target price include a heavy reliance on retail trading revenue, potential declines in cryptocurrency prices, and ongoing regulatory uncertainties.
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