Coinbase (Coin) is heading for its first quarter revenue report on Shaky Ground, with four Wall Street analysts hoping to make a mistake as retail trading lulls are likely to put pressure on the crypto exchange’s most profitable business line.
The company is expected to report its results for the first quarter after the market on Thursday. Analysts predict that earnings per share (EPS) has declined from $2.26 to $1.93, while revenues have fallen from $2.27 billion to $2.1 billion, according to fact set data.
In the first quarter of the previous year, EPS reported $4.40 and revenue of $1.2 billion. Trading volume is expected to land around $4390 billion in the fourth quarter.
JPMorgan reduced its EPS estimate to $1.59, with Coinbase trading volume down 10% during the quarter and Crypto’s market capitalization down 17%. Adjusted to cryptocurrency losses, the EPS is $2.39, partly supported by management costs and steady subscription revenue.
Barclays and Compass Points see deeper troubles. Barclays has significantly reduced revenue and EBITDA forecasts, saying the market has been cooling sharply since January despite the growth of stubcoin. Retail volume is $69 billion, well below the average street estimate of $79.8 billion.
Compass Point, more bearish, downgraded to sell its stock, forecasting trading revenue of $1.24 billion, falling 7% below the consensus. Coinbase claims it has lost its retail share with the Decentralized Exchange (DEXS) and warns of further pain in the second quarter.
Last week, popular trading platform Robinhood reported a 13% decline in trading-based revenues from the fourth quarter.
Stablecoins to rescue?
One area of optimism: Stablecoins.
Coinbase’s revenue from USDC has skyrocketed, strengthening subscription revenue as Stablecoin’s market capitalization rose 42% during the quarter. Barclays estimated $304 million in USDC-related revenue for the first quarter, and even Compass Point skeptics acknowledge that this offsets the decline in revenue with a slide in ether prices.
Oppenheimer reduced its volume forecast from $440 billion to $380 billion, noting that Coinbase has gained share in the US spot trading market. That’s a positive sign, but it may not matter whether the retailer is sitting in his hand or not.
There is also growing concern about long-term competitive pressures. Analysts said decentralized exchanges, particularly those that operate on faster and cheaper blockchains like Solana and Coinbase’s bases, portray retail users looking to exchange a wider range of tokens. Coinbase’s US market share is rising, but control as a centralized, regulated exchange may not be enough to dodge this shift.
Looking ahead, analysts warn that short-term rebounds of transactions may be slow to materialize, especially when retailers are often hesitant to re-enter the market until they regain previous losses.
Coinbase stocks have fallen 23%, trading at $198.06, while Bitcoin has risen 3.8% to $97,023 since the start of the year..
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