Coinbase Customers ‘HODLing’ While Company Cuts Costs: What 5 Analysts Are Saying After Q3 Earnings

Analysts are reacting to the third-quarter earnings report from Coinbase Global (NASDAQ: COIN). Here’s the latest on what the company’s user base and focus on costs mean for shares. 

The Coinbase Analysts: JMP Securities analyst Devin Ryan has an Outperform rating on Coinbase with a $155 price target. Mizuho Securities analyst Dan Dolev has a Neutral rating and $42 price target. Raymond James analyst Patrick O’Shaughnessy has an underperforming rating and no price target.

Needham analyst John Todaro has a Buy rating and $89 price target. Canaccord Genuity analyst Joseph Vafi has a Buy rating and $120 price target.

The Coinbase Takeaways: Coinbase’s revenue miss was due to lower than expected transaction revenue, Ryan said. The analyst said the results were better than expected.

“Overall, while trading activity continues to face headwinds, we are encouraged by the company’s progress on tighter expense management, and its ability to deliver a modest Adjusted EBITDA loss despite an intensely challenging environment,” he said.  The analyst said the outlook on the stock is “little changed.” Ryan said that investors might be “HODLing” in the crypto winter and there are no signs of Coinbase customers leaving for competing crypto platforms.

Dolev is impressed with the cost savings efforts taken on by Coinbase. “Overall, the stock is reacting positively to cost-trimming efforts, which we agree should be well-received,” Dolev said. The analyst has a Neutral rating and said that Coinbase could be losing market share to other crypto platforms. Competition from Fidelity and others could put pressure on Coinbase, he said. 

O’Shaughnessy said the bright spot for Coinbase in the third quarter was interest revenue during a time of rising interest rates. “We think investors may struggle to get excited about owning Coinbase primarily as a play on rising interest rates and the outlook for Coinbase’s brokerage and staking revenues continues to be lackluster,” O’Shaughnessy said.

The analyst does not see a path to “clear and sustainable profitability” for Coinbase. Todaro maintains a Buy rating on Coinbase and said the company turned in a mixed quarter. “While we are concerned around muted growth in NT staking and trading volumes coupled with an elevated expense outlook, we are excited about the growth in interest income from USDC and staking opportunities,” Todaro said.

Vafi said Coinbase signing new partnerships and focusing on costs are among the positives for its forward strategy. “Specifically, we like the company’s revenue diversification strategy through increased subscription & services, offshore expansion amid domestic regulatory uncertainty through principal approval in Singapore, and increased interest income from USDC due to rising rates,” Vafi said.

The analyst said trading activity is down, but Coinbase customers are HODLing and haven’t left the platform “Customers have more choices than ever relative to custody, staking and interoperability.”

Produced in association with Benzinga.

Edited by Alberto Arellano