By Senad Karaahmetovic
Shares of Coinbase (NASDAQ:COIN) are trading over 8% higher in pre-market Friday despite the cryptocurrency exchange reporting Q3 results that came in worse than what the Street was expecting.
Coinbase reported a loss per share of $2.43 on revenue of $590.34 million, worse than the expected loss of $2.36 on revenue of $654.85 million. The transaction volume fell 44% quarter-over-quarter (QoQ), fueled by a depressed trading volume (down 51% year-over-year). Still, subscription revenue jumped 43%.
Coinbase said it recorded 8.5 million monthly transacting users, up 15% year-over-year, beating the 7.8 million estimate. Assets on the platform were $101 billion at the end of Q3, down as much as 60% YoY.
JPMorgan analysts said the results had “much of what we expected” as they were looking for higher subscription revenue and lower trading volumes. Ultimately, they pushed the price target higher to $66 per share from $60 while remaining Neutral-rated.
“With the decline in trading volume, it looks like it will take longer to get to EBITDA positive, as Coinbase continues to invest in building out new products and services, in part supporting the growth of the crypto ecosystem. We lower our revenue and earnings due to lower retail activity levels,” the analysts said in a client note.
Oppenheimer analysts praised the management for strong expense control while adding that interest income is “still underappreciated.”
“Despite macro challenges persisting, fundamentally: 1) partnerships continue, driving digital asset adoption; 2) diversification becomes more entrenched; 3) adj. EBITDA loss shrunk from $151M to $116M QoQ; and 4) strong balance sheet to weather the crypto winter. Longer term, we like the valuation and setup of COIN, which continues to build for Web3 offerings and the next bull run,” they wrote in a note.