Investing

Coinbase Rallies 5% After-Hours As User Numbers Top Forecasts But Results Miss

Shares of cryptocurrency exchange and platform Coinbase (US:COIN) closed -8% lower on Thursday leading into the result print as investors worried that more pain could be right around the corner.

COIN is down more than -75% in 2022 alone due to volatile cryptomarkets and concerns about the group’s user base.

Since falling from around $250 at the beginning of the year, the stock has generally trended sideways for the most part of the last 6 months, tracking higher towards $100 and lower back down around $50 on varying news flow.

The stock, however, has rallied almost 5% in after-hours trading as results sparked optimism across the street.

Looking primarily at the numbers, the third quarter looked like an earnings miss at both the top and bottom line as quarterly revenues of $576 million fell short of consensus forecasts of around $640 million.

The group’s adjusted EBITDA came in with a -$116 million loss but was better than market forecast expecting a loss of more than -$200 million.

COIN’s net loss narrowed to -$545 million from more than -$1 billion lost in the prior quarter but was slightly worse than expected by the street.

Monthly transacting users (MTU), a key performance indicator for analysts rose to 8.5 million when compared to 7.3 million the prior year but fell from 9.0 million in the prior quarter. The figure came in ahead of the street which forecasted users to fall below the 8 million mark.

Transaction volume also fell to $159 billion from $327 million in the prior year and $217 million in Q2.

For the full year, management expects COIN to end the year with annual monthly active users of slightly below 9 million and average transaction revenue per user of around $20.

Coinbase also expects to reach more than $700 million in subscription and services revenue as a direct result of the interest rate environment.

Joseph Vafi from Canaccord Genuity believes Coinbase’s future roadmap remains sound in their view. Vafi likes the firm’s strategy to diversify its revenue base by increasing subscription & services, offshore expansion and increased USDC income.

Vafi remains ‘buy’ rated on the stock with an unchanged $120 price target but realizes that the stock’s performance will almost entirely be driven by underlying crypto spot prices.

Elsewhere, analysts at Raymond James remain bearish with an ‘underperform’ rating on the stock as the firm struggles to see COIN’s route to profitability  despite the improving EBITDA outlook from expense reductions and interest revenue.

COIN on average holds a consensus ‘overweight’ rating and average $120 price target.

Fintel’s platform analysis of the underlying options market for COIN suggests investor sentiment is currently ‘neutral’.

This is explained by a Fintel put/call ratio of 0.88 which suggests there is almost balanced put and call interest in the market for the stock. A ratio below 1 indicates bullish sentiment while a value above 1 indicates bearish sentiment.

COIN has risen 2 ranks in popularity this week and is now the 82nd most held security by retail investors on the Fintel platform. You can gain access to this data by linking your portfolio for free here.

This article originally appeared on Fintel

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