Coinbase delivers Q4 beat as cost cuts ease blow from weaker crypto trading volume; analysts focused on regulation
Investing.com -- Coinbase (NASDAQ: COIN) reported Tuesday fourth-quarter results that were better than feared as cost cuts helped ease the blow from a drop in crypto trading.
Coinbase Global Inc shares are down 1.4% in pre-open trading following the report.
Coinbase reported a loss of $2.46 a share on revenue of $629.1 million, topping Wall Street expectations for a loss of $2.51 a share on revenue of $588.2 billion.
The beat on the top line comes even as the cryptocurrency exchange cut costs amid falling trading volumes.
Operating expenses fell to $1.18B in Q4 from $1.58B in the prior-year period.
Total transaction revenue declined 12% quarter-on-quarter to $322M in Q4, driven by lower Q4 total trading volume.
Q4 total trading volume was $145B, down 9% sequentially in Q4, with total consumer trading volume down 23% in Q4 and institutional trading volume down 6% quarter-on-quarter in Q4.
The quarterly results arrive following a tumultuous year for cryptocurrencies, in which sentiment was rocked by the collapse of $LUNA in the second quarter of 2022, and the bankruptcy of FTX in Q4’22, Coinbase said.
BofA analyst Jason Kupferberg reiterated an Underperform rating amid "very little topline visibility."
"The boost from higher rates to interest income is helping stabilize the top line (albeit representing lower quality revenue) while OpEx controls have helped stem losses. That said, we think COIN continues to face meaningful headwinds (regulatory, competitive, lack of revenue diversity) that keep us cautious," the analyst wrote in a client note.
Piper Sandler analyst Richard Repetto hiked the price target by $5 to $70 per share on Overweight-rated shares.
"We believe COIN has done its best to be on the right side of regulation in the U.S. However, similar to a crypto winter, we see regulation and its impact as somewhat out of the company's control at this point," Repetto said in a note.
By Yasin Ebrahim and Senad Karaahmetovic