Shares of leading cryptocurrency exchange Coinbase have soared by 37% over the past week, reflecting a bullish trend alongside Bitcoin’s recent surge. Analysts anticipate robust performance for the firm as it prepares to announce its fourth-quarter results, with consensus predicting a substantial revenue boost.
Anticipated Q4 performance
Analyst consensus suggests a notable increase in Coinbase’s fourth-quarter revenue, which is projected to surge by approximately 22% from the third quarter to $825 million. This growth is expected to be driven by strong trading volumes, with estimates nearly doubling from $76 billion in Q3 to $142.7 billion in Q4.
Additionally, the firm is forecasted to report earnings-per-share of $0.02 for the fourth quarter, marking a positive turn from the loss of $0.01 per share reported in the previous quarter.
The surge in Coinbase’s shares parallels the upward momentum in the cryptocurrency market, particularly evident in Bitcoin’s 16.3% price increase over the past seven days. Competitor platform Robinhood also witnessed a boost in fourth-quarter revenue, attributed to a rise in crypto trading revenue, which saw a 10% year-on-year increase to $43 million.
Challenges and contrary views
Despite optimistic projections, some analysts remain cautious about Coinbase’s performance in 2024. In a note to investors, JPMorgan analysts anticipate declining the company’s share price, citing concerns over the initial performance of spot Bitcoin ETFs trading.
However, recent upticks in net inflows to ETFs, notably BlackRock’s IBIT with $493 million inflows on Feb. 13, signal potential resilience in this market segment.
Coinbase faces ongoing legal challenges, notably a lawsuit filed by the United States Securities and Exchange Commission (SEC) in June 2023. The SEC accused the exchange of violating regulations by selling unregistered securities. However, some legal experts express confidence in Coinbase’s defense, believing that the SEC’s interpretation of tokens as investment contracts is flawed.
Market response and current performance
Despite regulatory and competitive pressures, Coinbase’s shares are trading up by 14%, reflecting investor optimism amidst a broader rally in the crypto sector. Bitcoin’s surge above $50,000 on Feb. 13 has further buoyed the prices of publicly traded crypto companies, underscoring the market’s bullish sentiment.
