Paul R. La Monica
Bitcoin has been on a wild ride this year, just like the stock market. But the world's most valuable cryptocurrency, unlike the S&P 500 and other major indexes, is actually up a bit this year. Will that be good news for crypto asset manager and brokerage firm Coinbase Global as it gets set to report earnings Thursday afternoon?
Coinbase has also been whipsawed by the volatility in stocks and cryptocurrencies. Shares are down more than 20% this year after a hot start to 2025. The stock surged before President Donald Trump's inauguration, partly on the hopes that Trump and his top economic advisors would support pro-crypto regulatory policies.
But Bitcoin prices peaked at a record high of just under $110,000 in mid-January, then plunged below $75,000 by early April in the wake of the massive selloff in just about all risk assets following Trump's "Liberation Day" tariff announcement.
That selloff might have been overdone, and as Bitcoin has climbed back toward $100,000, Coinbase's stock has rebounded, too, surging nearly 30% in the past month. Several Wall Street analysts see even more upside ahead.
"Since the election, we have seen the most pro-crypto President, Administration, Congress, regulators, executive orders, and SEC statements, that are meant to signal to the world that the U.S. is open for blockchain businesses to attract capital, projects, and talents," wrote Oppenheimer analyst Owen Lau in a report previewing Coinbase earnings.
Lau has a Buy rating on Coinbase stock with a price target of $279 -- more than 40% higher than current levels. And he's hopeful that the stock will rebound once trade-war tensions begin to dissipate.
"It's unfortunate to see Trump's on-and-off again tariffs have driven bear market concern, recession fear, and pullback of retail trading," Lau said.
Still, the first quarter could be a tough one for Coinbase. Analysts are expecting a decline in revenue and earnings per share from the fourth quarter, to sales of $2.1 billion and earnings per share of $1.93, according to estimates from FactSet.
Analysts are also preparing for results to be a bit below forecasts following weak crypto-trading numbers from Coinbase rival Robinhood Markets for the fourth quarter. Robinhood reported a bigger-than-expected sequential drop in crypto-trading volume.
Rosenblatt Securities analyst Chris Brendler wrote in his Coinbase earnings-preview report that he cut his trading revenue forecast for Coinbase following Robinhood's earnings, and now expects a 10% drop from the fourth quarter. He still has a Buy rating on Coinbase stock with a $260 price target.
Brendler is optimistic that the worst may soon be over though for Coinbase. He is predicting a rebound in trading volume in the second half of the year "as legislative progress and macro clarity spur increased crypto activity."
Congress is working on a bill that would provide more legal framework for the regulation of stablecoins, cryptocurrencies that are pegged to the value of other assets.
Coinbase in particular is hoping to boost its stablecoin trading business. The company has a partnership with payments tech firm Circle, which developed the USD Coin that is pegged to the dollar.
Coinbase is also looking to generate more fees from crypto staking, which allows investors to earn rewards by locking digital coins in virtual wallets, as well as other custodial services.
"One of the metrics...that will be most closely scrutinized is subscription and services revenue, which includes staking and custodial fees, as growth in this segment is key to its effort to diversify its revenue streams and reduce its dependence on transaction fees," wrote Mark Palmer, an analyst with The Benchmark Company, in a report Monday. He has a Buy rating on Coinbase stock with a $252 price target.
If Coinbase shows more progress in subscription and services revenue, then the recent momentum for the stock could continue -- especially if Bitcoin keeps rallying.
Write to Paul R. La Monica at paul.lamonica@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
May 08, 2025 03:00 ET (07:00 GMT)
Copyright (c) 2025 Dow Jones & Company, Inc.
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.