This is a segment from the Forward Guidance newsletter. To read full editions, subscribe.
Despite Coinbase’s second quarter milestones, not all is rosy for the crypto exchange as it gets set to discuss its Q2 results tomorrow.
Coinbase’s stock price roughly doubled during the quarter — performance Oppenheimer analysts attributed to its S&P 500 inclusion and progress around the GENIUS Act (progress that led to its ultimate passage earlier this month).
COIN shares were trading around $382 on Wednesday at 1:30 p.m. ET — up 9% from a month ago.
And yet, in other ways, COIN’s setup ahead of the quarterly print is “unfavorable,” Oppenheimer’s Owen Lau and Guru Sidaarth wrote in a note. They estimate Coinbase’s Q2 trading volume to be ~$220 billion, marking a 44% decline from the prior quarter.
Morningstar analyst Michael Miller noted that transaction volume will always be a key data point, given transactions account for Coinbase’s largest revenue stream.
Beyond that, though, Miller will be listening for commentary on pricing pressure (or lack thereof) as competitors like Robinhood ramp up their crypto offerings in a friendlier regulatory environment.
“I’ll also be looking for any data or commentary on the firm’s Base transaction volume and revenue and how much USDC is on the firm’s platform and products,” Miller told me. “While Coinbase is still heavily exposed to cryptocurrency trading, USDC and Base have enjoyed a lot of momentum this year.”
Miller, in a Monday note, revealed he had increased his COIN “fair value estimate” from $170 to $205. A part of that was indeed due to USDC’s market cap eclipsing $60 billion and overall bullish sentiment after the stablecoin-focused GENIUS Act became law. If you forgot, Coinbase earns interest income on the USDC it holds on its platform.
Source: rwa.xyz
Despite Miller’s COIN upgrade, he still considers shares “significantly overvalued” as the market reacts to recent crypto price surges.
The Oppenheimer analysts see things a bit differently. They have a COIN price target (in the next 12-18 months) of $417.
Lau and Sidaarth note Coinbase’s US derivatives and International Exchange notional values were more resilient than spot trading volume — up 22% and 28%, respectively, quarter over quarter. That’s an area they’re more focused on after Coinbase’s Deribit acquisition.
Maybe Coinbase CEO Brian Armstrong will give us a sense of other possible acquisition targets. As far as link-ups go, Coinbase on Wednesday revealed a partnership with JPMorgan Chase that lets Chase customers link their bank accounts to Coinbase wallets.
