Street Calls of the Week
On Friday, Piper Sandler maintained a Neutral stance on Coinbase (NASDAQ:COIN) Global Inc. (NASDAQ:COIN), keeping the price target at $245.00. The latest earnings report from Coinbase revealed a slight miss on core earnings per share (EPS), compared to the firm's expectations.
Calculations by Piper Sandler, after adjusting for a $319 million mark-to-market (M2M) loss on cryptocurrency assets and a normalized tax rate, put core EPS at $0.73. This figure falls short of their $0.75 estimate and the consensus estimate of $0.95.
Coinbase's total revenue for the quarter stood at $1,450 million, surpassing Piper Sandler's estimate by approximately 9%, or $113 million. However, the company's operating expenses also exceeded expectations by about 6%, or $65 million, totaling $1,107 million. Despite these higher costs, Coinbase's adjusted EBITDA came in at a positive $596 million, which was higher than the predicted $497 million.
The report also touched on Coinbase's future financial outlook, indicating a potential decrease in operating margin. Based on July's trading revenue and extended to the entire third quarter of 2024, Piper Sandler estimates that Coinbase's operating margin could significantly reduce from approximately 24% in the second quarter to around 8% in the third quarter.
This anticipated contraction is attributed to Coinbase's plans to increase variable marketing spending and expand its workforce in the second half of 2024.
In other recent news, Coinbase Global Inc has been the focus of several developments. The company reported a substantial increase in its Q2 revenue, reaching $1.38 billion, fueled by a surge in crypto trading volumes. However, Jefferies, a global investment banking firm, warned of a potential decrease in trading volumes and subscription revenue in its recent analysis, even as it raised Coinbase's stock price target to $245.
Coinbase also expanded its board to include an OpenAI executive and a former U.S. Solicitor General, a move seen as an effort to impact U.S. crypto policy. The company faced regulatory hurdles as its subsidiary, CB Payments Limited, was fined £3.5 million by the UK's Financial Conduct Authority for lacking adequate anti-money laundering controls, but reiterated its commitment to regulation and collaboration with financial authorities.
Finally, Citi analyst upgraded Coinbase stock from Neutral to Buy, citing recent shifts in the U.S. political landscape and a significant Supreme Court decision as potential benefits for the company.
InvestingPro Insights
In light of Piper Sandler's analysis of Coinbase Global Inc. (NASDAQ:COIN), InvestingPro data and tips can provide additional context for investors. With a market capitalization of $52.22 billion, Coinbase's financial health is a key consideration. The company's P/E ratio stands at 36.99, reflecting investor sentiment about its earnings potential. Moreover, a PEG ratio of 0.26 suggests that the stock may be undervalued based on expected growth rates, making it a point of interest for growth-oriented investors.
InvestingPro Tips highlight that analysts expect net income and sales growth for Coinbase in the current year, which aligns with the revenue outperformance noted in the recent quarter. Despite a recent downturn in stock price over the last week, with a 12.47% decline, the longer-term perspective shows a significant 135.14% one-year price total return, indicating resilience and investor confidence over the past year.
For those seeking a deeper dive into Coinbase's financials and future performance, InvestingPro offers additional tips and data points. There are 12 more InvestingPro Tips available for Coinbase at https://www.investing.com/pro/COIN, which can help investors make more informed decisions.
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