Coinbase reports strong Q2 earnings, investing in infrastructure and targeting 1 billion users

From Nasdaq

August 07, 2024 09:28:00 AM:

Coinbase Global Inc. reported strong second-quarter results, with revenues beating estimates and adjusted EBITDA up more than threefold year over year. Subscription and services revenues hit an all-time high, while total operating expenses increased due to a loss on crypto assets. Trading volume also saw significant growth, with consumer and institutional volumes up over 140%.

Despite a decline in the price of Ethereum and expectations of a Fed rate cut, Coinbase expects third-quarter subscription and services revenues to be between $530 million and $600 million. The company is heavily investing in infrastructure and foundational platforms to bring more people into the crypto market, aiming for 1 billion users. Regulatory clarity and strategic partnerships are also helping fuel growth.

Shares of Coinbase have seen a significant increase year to date, outperforming industry and sector averages. The rising estimates, product expansion, and operational expertise have been key drivers of the stock’s performance. However, Coinbase shares are currently trading below the 50-day moving average, indicating a bearish trend.

While earnings estimates for Coinbase have seen downward revisions for 2024 and 2025, the company is trading at a premium valuation compared to the industry average. The high valuation is justified by growth prospects, rising estimates, and better return on invested capital. The recent volatility in the crypto market has affected major cryptocurrencies like Bitcoin and Ethereum, but strategic moves and improving adoption bode well for future growth.

Coinbase’s efforts to accelerate growth, increase market share, and enhance the crypto trading experience make it a solid investment choice, according to a Zacks Rank #3 (Hold) recommendation. Investors holding the stock are advised to retain it, while others may wait for a better entry point. The company’s emphasis on innovation, cost-control, and market expansion positions it well for future success in the crypto economy.

Read more at Nasdaq MarketSite.: Should Coinbase (COIN) Be in Your Portfolio Post Q2 Earnings?