Coinbase Earnings Expectations Crushed on Crypto Crash as Stock Price Slumps

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In Brief
  • Coinbase revenue expectations have been lowered.

  • A quarter of crypto consolidation means fewer fees for the firm.

  • COIN is at all-time low, down 75% from ATH.

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U.S. crypto exchange giant Coinbase is poised to release its Q1 earnings report but expectations have been battered along with company stock value on the crypto market slump.

Expectations are grim for the biggest earnings report in the crypto industry. Coinbase Global Inc. will release the report on May 10, and it is unlikely to be anywhere near the epic revenue figures the firm reported for Q4 2021.

The consensus analyst estimate for the firm’s first-quarter revenue is $1.5 billion according to FactSet. This results in an adjusted earnings loss of one cent per share.

Yahoo! Finance has summarized the expectations for this and future quarters with a revenue estimate of between $1.24 billion and $1.92 billion for the period. Earnings have been estimated at between $0.68 and $2.02 per share.

Crypto activity downturn

Coinbase makes almost 90% of its profit from trading fees, some of which are the highest in the industry. A massive downturn in crypto markets this year will have affected these high-earning transaction fees for the firm.

In a note to clients, equity research analyst at investment bank Needham & Co. John Todaro said:

“Despite the downturn in crypto activity, [the first quarter] was marked by few sudden price swings which can lead to higher volumes on increased volatility. The period was instead marked by a steady, continuing decline with periods of range-bound markets leading to relatively muted volumes.”

Other influences on Coinbase revenue include the lackluster response to its much-hyped NFT marketplace. The company only granted access to a handful of users which resulted in very low trading volumes when compared to its rivals.

Coinbase’s monthly transacting users (MTUs) may have also fallen for a quarter that saw crypto markets largely in consolidation. Most major crypto assets remained range-bound between January and March this year but have slumped to their lowest levels in ten months over the past week.

COIN slumps 20%

Wall Street appears to have factored in the underwhelming earnings expectations as Coinbase stock has taken a massive hit since the start of trading this week.

According to MarketWatch, COIN slumped 19.5% on Monday, May 9, to wind up at just $83.45 in after-hours trading. The stock price has crashed a whopping 47% over the past month which is more than the crypto market itself has.

COIN is currently at an all-time low, down more than 75% from its November all-time high of $342.

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Martin has been covering the latest developments on cyber security and infotech for two decades. He has previous trading experience and has been actively covering the blockchain and crypto industry since 2017.

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