Coinbase (COIN) debuted on the public markets in April at the height of the crypto bull run. Following which, bitcoin’s price dropped, taking down with it all other crypto assets like it always does. Some questioned at the time, whether the public listing of Coinbase amounted to the bull market’s peak.
The recent crypto market’s resurgence has indicated it may have been too early to call the bull market’s demise. In any case, Coinbase’s Q2 results show that even as crypto prices were falling – which incidentally also affected COIN’s share price – its business kept on charging ahead regardless.
The crypto exchange delivered a Q2 beat on both the top-and bottom-line. Revenue came in at $2.23 billion, a massive 1098.9% increase on the same period last year and ahead of the consensus estimate by $350 million. Q2 GAAP EPS hit $6.42, $3.84 above the Street’s call.
MTUs (monthly transacting users) increased to 8.8 million, up 44% sequentially, and ahead of consensus at 7.2 million, while trading volume increased by 38% from the previous quarter to $462 billion.
That said, Q3 appears more muted so far. July retail MTUs numbered 6.3 million, although management pointed out August’s MTD volumes and MTUs are slightly above July levels, but are still lower than earlier in the year. Accordingly, the company expects a drop in MTUs and trading volumes in Q3 compared to Q2.
Covering Coinbase for investment firm Rosenblatt, analyst Sean Horgan likes the company’s stance of shutting out near-term noise.
“It is clear that COIN has a long-term focus, and is not going to guide based on monthly or quarterly trends,” the analyst said.
Horgan also believes the recent concerns around regulation “will drive more activity in 3Q,” despite July and August MTD trends coming in below Q2 levels.
Additionally, given the uptick in demand for multiple products (Coinbase Card, Borrow/Lend, Staking, etc.), Horgan expects Coinbase to convert more than 50% of “incremental downloads” to MTUs in 3Q.
“Net/net,” the analyst summed up, “COIN stock is beholden to the rigors of crypto prices, and management won’t provide short-term oriented guidance. That said, management’s focus seems more akin to its digital wallet peers, which we view as an incremental positive for unit economics.”
To this end, Horgan reiterated a Buy rating on COIN shares along with a $420 price target. Investors stand to pocket ~60% gain should the analyst’s thesis play out. (To watch Horgan’s track record, click here)
Most analysts agree. Based on 10 Buys, vs. 3 Holds and 1 Sell, the stock has a Moderate Buy consensus rating. While the $362 average target is below Horgan’s, it still offers gains of ~41% on the one-year time horizon. (See COIN stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
