Coinbase Misses Q3 Earnings Target – Shares Fall

A landmark achievement where it became the first cryptocurrency company to go public, coupled with an unprecedented bull run, had set the company on the path to a $2.2 billion dollar revenue in Q2 2021.

Third Quarter Earnings

The third quarter however did not come with the good tidings expected, as revenue fell to $1.31 billion, more than a 40% decline from the previous quarter and a 17% decrease from the expected Q3 revenue of $1.57 billion. Earnings Per Share (EPS) also fell short of the expectations of Wall Street analysts, hitting $1.62, about $0.17 shy of the expected figure.

The failure to hit revenue targets has negatively impacted on investor confidence as mass selloffs have consequently led to a dip in share prices. COIN shares plunged by almost 10% in the past one month and currently trades at its lowest on the 30-day price chart (at the time of writing). Experts blame the revenue deficit and stock dip on the low cryptocurrency market volatility, although many are still bullish on the long run. Commenting on COIN performance in Q3, Muhizo Securities analyst Dan Dolev said:

“Most significantly, 3Q saw a dramatic decline in retail take rate, likely among the most dramatic compression in COIN’s short history as a public company. This helped drive the significant (nearly 20%) ‘miss’ in revenue vs. consensus expectations.”

Coinbase Still in Strong Position

Analysts view the freefall as a good buying opportunity for investors, considering the growing acceptance of cryptocurrencies and its underlying technology. One of them is Rosenblatt analyst Sean Hogan who strongly predicts better days ahead for COIN in the market. He tips the share price to recover due to higher trading volumes and a possible market uptrend.

“We believe consensus 4Q (and likely 2022) estimates will be revised higher following the report, which should bode well for the stock into next quarter. Crypto prices reaching all-time highs also suggests another period of strong volumes ahead is possible.”

He said.

Coinbase NFT Marketplace

Following the footsteps of its competitor exchange, Coinbase announced in October 2021 that it will launch its own NFT marketplace. The company’s decision to delve into the NFT space was hardly surprising as NFT trading volumes surpassed $10 billion in Q3 2021 according to dAppRadar. Coinbase announced that its NFT marketplace will enable users to mint, trade and store collectibles like other popular platforms such as OpenSea. The platform will also reportedly include “social features” and will allow users to showcase their collection.

Coinbase CEO Brian Armstrong likened the platform to an NFT equivalent of photo and video sharing social network, Instagram. According to him, the platform will be designed to be interoperable with other NFT platforms. Coinbase NFT marketplace will open new revenue streams for the exchange giant, while reducing reliance on fees. Burgeoning NFT trading volumes due to growing interest in the collectibles market could make all the difference in the company’s revenue and stock performance in the next few quarters.

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