As per the latest earnings report, Coinbase Inc disclosed that its revenue had surged 112% annually, culminating in $1.64 billion, surpassing analysts' forecasts by $300 million. The company's quarterly earnings per share (EPS) amounted to $4.40, which achieved a notable improvement over the consensus estimate of $3.33 and a net loss of $0.34 per share in the corresponding period of the previous year.
COIN Revenue Factor
Transaction fees are Coinbase's primary source of revenue, and the company thrives during periods of high cryptocurrency trading activity. In 2021, stimulus checks, social media enthusiasm, and a fear of missing out (FOMO) propelled more investors into speculative investments and cryptocurrencies, increasing the company's total revenue by 514 percent.
However, due to rising interest rates deflating this mirage in 2022, revenue plummeted 59%. Revenue decreased an additional 3% in 2023 due to the ongoing "crypto winter." In contrast, Coinbase has experienced a consecutive rise in total trading volume and revenue in recent times, coinciding with the recovery of the cryptocurrency market.
Two primary factors have stabilized the market. Initially, in the preceding year, the price of Bitcoin increased by over two-thirds due to the ETFs and the Bitcoin "halving,"
Furthermore, the market ceased to anticipate an increase in interest rates. The Federal Reserve has expressed its current stance on delaying rate cuts until inflation declines. As a result of this stability, a greater number of investors have shifted their focus to speculative investments, growth equities, and cryptocurrencies.
Coinbase Stock: Key Financial Forecast
The adjusted EBITDA margin for COIN was increased to 31% in 2023 due to multiple cycles of layoffs and cost reductions. To stabilize margins, Coinbase also expanded its Coinbase One subscription service, which provides, among other benefits, priority support, commission-free transactions, and increased staking rewards.
In addition, the Coinbase Prime platform for institutional investors was expanded. The pattern above persisted during the initial quarter of 2024, as adjusted EBITDA increased by over threefold sequentially and annually.
Coinbase anticipates its subscription and services revenue to increase by 3%-17% sequentially and 57%-79% year-over-year, presuming crypto asset prices remain stable. The company did not provide a specific outlook for the second quarter.
Analysts project that revenue will increase by 77% to $5.5 billion for the entire fiscal year, adjusted EBITDA will increase by 181% to $2.7 billion, and the adjusted EBITDA margin will strengthen to 49%. Due to the volatile nature of the cryptocurrency market, these forecasts must be regarded with caution.
Coinbase Financial Metrics
In terms of valuation, Coinbase Global Inc.'s shares are presently being exchanged at a price-earnings ratio of 45.39. This figure surpasses both the company's historical median and the industry median of 19.63.
Based on the GF Value estimation of $103.57 per share, the stock is considered substantially overvalued, as evidenced by the price-to-GF Value ratio 2.05.
The GF Value is calculated by adjusting historical trading multiples, including but not limited to the price-to-free cash flow, price-to-earnings, and price-sales ratios, to capture the company's forthcoming business outcomes and past performance.
Coinbase Stock Price Prediction Technical Analysis
In the daily chart of COIN stock price, the broader market direction is bullish, where the most recent price showed a bullish continuation opportunity from the descending channel breakout.
In the major structure, the dynamic 100-day SMA is a major support, in line with the 20-day Exponential Moving Average. We may expect the buying pressure to extend as both lines are below the current Coinbase stock price with a bullish slope.
Based on the daily outlook of COIN, the primary aim for this stock is to test the 337.68 Fibonacci Extension level. Moreover, a stable market above the 260.00 level could increase the buying pressure beyond the 350.00 level.
On the bearish side, a failure to hold the price above the channel resistance could be a challenging factor for bulls. In that case, a bearish daily close with exhaustion below the 100 day SMA could be a potential bearish factor for this stock.
