Coinbase stock price continued its strong recovery this week as investors focused on its upcoming financial results. COIN has surged in the past seven days straight and is now hovering near its highest level since January 2nd of this year. It has risen by more than 39% from the lowest point this month.
Coinbase earnings ahead
There are signs that Coinbase will publish strong financial results on Thursday. For one, Robinhood, a leading player in the stock and crypto market, released great results on Tuesday, pushing its stock up by over 15%. One reason why Robinhood’s results were great is that it attracted strong crypto trading during the quarter.
This is a sign that trading in Coinbase’s ecosystem continued rising because it is the biggest crypto exchange in the United States. Further, the company will likely provide a better update about its institutional business, which has been embraced by companies like Blackrock, Franklin Templeton, and Fidelity.
Coinbase will continue playing an important role in the Bitcoin ETF custody business as inflows jump. This is an important segment that gives it permanent capital since these assets will remain there for a long time.
Coinbase will also point to more account sign-ups now that Bitcoin and other coins have rallied recently. In most periods, companies like Coinbase, Binance, and Kraken usually see a lot of activity when cryptocurrencies are surging. This happens mostly because of the Fear of Missing Out (FOMO) that happens in that period.
Analysts expect the earnings report will show that the company’s revenue jumped to over $818 million in the last quarter. That will be a strong report considering that it made $629 million in the same quarter in 2022.
Most importantly, expectations are that the company will publish its first quarterly profit since 2021. Analysts believe that its earnings per share (EPS) will be 20 cents, an improvement from the prior quarter’s loss of $2.2.
The last quarter showed that Coinbase’s revenue came in at $674 million and its loss per share was 0.01 cents. The company has a strong record of beating analysts and its own guidance.
The case for Coinbase
The case for Coinbase as an investment has never been strong. The company has a strong market share in the United States, where it serves millions of retail customers. It competes primarily with smaller players like Gemini and Kraken. This market share means that the company can increase its fees.
Second, the company is growing its non-commission business as it focuses on its subscription segment. Analysts expect that this division will continue growing as the bull run continues.
Further, the company will likely doing well as Base, its blockchain continues gaining market share. Base now has over $426 million in assets and the developers are continuing to come in.
Coinbase stock price forecast
The daily chart shows that the COIN stock price has staged a strong recovery in the past few months. The most recent part of this recovery started when the company settled at $114 this month. It has now remained above the key psychological point at $150 and the 50-day moving average.
Therefore, the outlook for the shares is positive, with the next price to watch being at $187.72, the highest point in December. This price is about 17% above the current level.
Risks for investing in Coinbase
The main risks for investing in Coinbase is that the company’s insiders, including the CEO have been dumping the shares recently. They have sold over 2.5 million shares in the past 12 months. This is one of the top red flags. Further, there is a risk that cryptocurrencies will retreat in the coming months.
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