Coinbase's second-quarter results were outstanding, Katri said. Its revenue, adjustedEBITDAAnd EBITDA margins beat consensus estimates on Wall Street. However, as cryptocurrencies fell sharply towards the end of the second quarter, Coinbase's platform trading volume also slipped.
The five-star analyst expects total trading volume at Coinbase to decline starting in the third quarter. This is understandable as the company saw a year-over-year increase in trading volume of 1550% and a year-over-year increase in trading revenue of 1023%.
However, Katri added: "Crypto on the platformAssetsThe decline in value appears to be the result of a quarterly decline in cryptocurrency prices, rather than a drop in usage. "
The company still has multiple monetizable opportunities and is expected to continue to strengthen its long-term profitability. In addition, charging higher fees per transaction will affect user retention and engagement, although this effect seems to be offset by the platform's "breadth of products and services".
While cryptocurrency volatility moderated in July, regulatory uncertainty is expected to continue to cause significant movements in Coinbase shares. Throughout the second quarter, U.S. and Chinese regulators made announcements about cryptocurrencies, sometimes with devastating consequences for Bitcoin and its ilk. Katri believes that volatility is here to stay.
On TipRanks, 11 analysts have a "buy" rating, 3 have a "hold" rating, and 1 have a "sell" rating for Coinbase, with a consensus rating of Moderate Buy and an average price target of $369.25, implying a 33% upside from the current stock price.