Goldman Sachs Gives COIN Buy Rating Despite Q3 Earnings Miss

Analysts from Goldman Sachs and Morningstar stay bullish on COIN even though the company reported lower-than-expected third quarter earnings.

article-image

Blockworks exclusive art by Axel Rangel

share

key takeaways

  • Coinbase’s total net revenue dropped 39.3% in the third quarter
  • Goldman Sachs maintains a positive outlook for the exchange despite the reported revenue decline

Goldman Sachs maintains its buy rating for Coinbase despite the cryptocurrency exchange’s weaker-than-expected third quarter earnings report. Coinbase’s total net revenue dropped 39.3% from $2.033 billion to $1.234 billion during the third quarter, according to Tuesday’s earnings report.

“We think there’s an abundance of innovation in this space, and we want to double down on those opportunities,” Emilie Choi, president and chief operating officer of Coinbase, said during the company’s earnings call Tuesday. Some of those opportunities reside within non-fungible tokens (NFTs) and Web3, Choi mentioned.

The company entered Q3 with “softer crypto market conditions, driven by low volatility and declining crypto asset prices,” Coinbase said. However, market conditions improved toward the end of Q3 and have continued into Q4, the report noted.

Goldman Sachs analysts point to Conbase’s new initiatives as a reason to be optimistic about the stock. 

“While shares will likely give back some of their recent strength heading into the quarter, we see a number of reasons to be positive,” Goldman analysts wrote in a Coinbase report released Thursday. 

Coinbase’s growing subscription services and the upcoming NFT platform are going to advance the company in upcoming quarters, the report noted. 

“While COIN remains a difficult to predict financial model with broader adoption trends and the development of the crypto ecosystem driving shares on a day-to-day basis, we continue to believe COIN represents one of the best ways to get exposure to the expansion of the crypto ecosystem, and we remain constructive on COIN’s ability to continue to innovate and drive further adoption of crypto assets,” the report said. 

Morningstar analysts took a similar view Wednesday. 

“We are raising our fair value estimate for Coinbase to $225 from $201,” Morningstar analysts wrote in a mid-week Coinbase report. “Our fair value estimate benefited from a $20 adjustment for higher near-term transaction fee revenue as cryptocurrency markets set new highs, and a $15 increase from higher projected revenue from Coinbase’s staking and new NFT businesses.” 

COIN shares fell following the release of the earnings report Tuesday before paring losses. The stock was trading flat after the first hour, despite nearly 3% losses for top cryptocurrencies BTC and ETH, and sharper selloffs among smaller cap names.


Get the day’s top crypto news and insights delivered to your inbox every evening. Subscribe to Blockworks’ free newsletter now.


Tags

Upcoming Events

Salt Lake City, UT

MON - TUES, OCT. 7 - 8, 2023

Blockworks and Bankless in collaboration with buidlbox are excited to announce the second installment of the Permissionless Hackathon – taking place October 7-8 in Salt Lake City, Utah. We’ve partnered with buidlbox to bring together the brightest minds in crypto for […]

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

Research Report Cover Vertex.jpg

Research

The proliferation of new perp DEXs has led to fragmented liquidity across various DEXs and chains. Vertex, known for its vertically-integrated DEX that includes spot, perpetual, and integrated money markets, is now tackling cross-chain liquidity fragmentation through horizontal integration with the launch of new Edge instances. Vertex's integrated offerings and cross-margined account structure amplify the benefits of new instances: native cross-chain spot trading, optimized cross-chain basis trading, consistent interest rates, reduced bridging friction, and more.

article-image

Partnering with EtherFi and Angle, the fully on-chain perp DEX features bespoke collateral

article-image

Sponsored

Gavin Wood introduced the next evolutionary step for the Polkadot network: the Join-Accumulate Machine, or JAM

article-image

The side events were the places to be at Consensus 2024, according to attendees

article-image

Also, who’s come out swinging in the spot ether ETF fee war — and who could undercut them

article-image

I know it is not in their nature, but US regulators could learn a lot by researching the digital asset frameworks that overseas regulators have already gotten right

article-image

Also, the ETF hype train can count out at least one member