Coinbase Falls 5.8% Despite Strong Q4 Earnings

Coinbase Global, Inc. (COIN) has reported better-than-expected results for the quarter ended December 31, 2021. Following the earnings, shares of the cryptocurrency exchange platform operator declined 5.8% to close at $169.10 in the extended trading session on Tuesday.

Coinbase reported quarterly revenues of $2.5 billion, which denotes a significant jump from the prior year’s figure of $585.1 million. Also, the figure surpassed the consensus estimate of $1.89 billion.

The overall growth in revenues was aided by the massive year-over-year jump witnessed in Transaction revenue, and Subscription and Services revenue to $2.3 billion and $213.4 million, respectively.

The company’s earnings per share (EPS) at the end of the quarter rose to $3.32 from $0.66 per share in the same quarter last year. The figure surpassed the consensus estimate of $1.80 per share.

Monthly Transacting Users (MTU) at the end of the quarter stood at 11.4 million against 2.8 million in the year-ago quarter. Also, trading volume and assets on platform witnessed a significant year-over-year increase and stood at $547 billion and $278 billion, respectively.

Guidance

The company forecasts retail MTUs and total trading volume to decline sequentially in the first quarter of 2022. On the expense side, Coinbase anticipates transaction expenses to be in the low-to-mid twenties as a percent of net revenue.

For 2022, the annual average retail MTUs is expected to be between 5 million and 15 million. Further, the company expects strong growth in subscription and services revenue.

Price Target

Mizuho Securities analyst Dan Dolev reiterated a Hold rating on the stock with a price target of $220, which implies upside potential of 22.5% from current levels.

The Wall Street community is optimistic about the stock and has a Strong Buy consensus rating based on 10 Buys, 1 Hold and 1 Sell. The average Coinbase price target of $339.91 implies that the stock has upside potential of 89.3% from current levels. Shares have declined 45.3% over the past year.

Hedge Fund Trading Activity

TipRanks’ Hedge Fund Trading Activity tool shows that confidence in Coinbase is currently Very Negative, as the cumulative change in holdings across all 12 hedge funds that were active in the last quarter was a decrease of 1.2 million shares.

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