On Tuesday, after the close of the main session, Coinbase released its Q3 earnings. The company’s revenue fell 41% qoq to $ 1.31 billion, which was worse than the market consensus of $ 1.57 billion. The decrease in the indicator was due to a drop in interest in the crypto currency market after bitcoin fell in value from $ 60 thousand to May to $ 30,000 in July. Against this background, many alternative tokens, including meme coins, have become uninteresting to the investment community and trading volumes have dropped significantly. Coinbase’s 3Q trading volume fell 29% qoq to $ 308.88 billion, while active users fell 16% to 7.09 million.Adjusted EBITDA declined 46% qoq to $ 618 million, which was also worse the forecast of $ 662.3 million. Earnings per share was $ 1.62 versus $ 6.42 a quarter earlier, but the financial result almost coincided with the market consensus ($ 1.68). The company’s results were met negatively, with shares plummeting 15% after the market closed in an additional session.
Nevertheless, not everything is as bad as it seems at first glance. The company’s management said it sees a significant improvement in trading activity from October to November. The turnover for this period increased by an average of 29% compared to the 3rd quarter. We believe that this trend will continue until the end of the year, as interest in crypto assets has increased significantly, and bitcoin has grown since the beginning of October and began to renew its all-time highs in November. We expect Q4 trading to surpass $ 400 billion. We see Coinbase continue to outperform the competition and continue to see the company as the best bet based on the continued growth of the crypto economy.
We see more and more people and organizations starting to view cryptocurrency as more than just “digital” gold or a hedge of fiat inflation, but rather see more opportunities in Web 3.0. Cryptoeconomics continues to evolve with apps like DeFi as well. As a result, engagement increases and cryptocurrency prices rise. It is important to note that we continue to see Coinbase implement its strategies to become the best financial services provider for the crypto economy, including Coinbase NFT, staking and Coinbase wallet. We like the company’s business and expect to see strong Q4 earnings, so we are raising our target valuation for the company’s stock from $ 343 to $ 379.
Coinbase Global is a regulated cryptocurrency company that provides customers around the world with a platform for buying, selling, transferring, and storing digital assets. The Company offers a variety of products and services that enable individuals, businesses, and developers to participate in the cryptoeconomy.