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.


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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.

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