Key Takeaways
- Coinbase fell 16% after its Oct. 29 report to a 52-week low on a weak quarter, a record Binance hack, and Bitcoin’s slide.
- Transaction revenue fell 44% from a year earlier, and analysts keep cutting their estimates.
- Robinhood and Circle face the same crypto pullback.
- At about 80x forward earnings, the selling doesn’t look overdone until trading recovers.
A weak quarter, a record hack at a rival and Bitcoin’s slide have knocked 16% off Coinbase Global (COIN) since its Oct. 29 report, and the stock hit a new 52-week low of $131.55 on Friday, Nov. 6, before closing at $134.76.
The crypto pullback has reached Robinhood Markets (HOOD), down 12% over the same stretch, and USDC issuer Circle Internet Group (CRCL), down 15%.
A soft quarter, then a record heist
Coinbase’s third-quarter report on Oct. 29 had to show revenue holding up. Revenue did hold flat from the second quarter at $1.22 billion, but that was 35% below a year earlier, and transaction revenue fell 44% to $590 million. Of its $719 million of net income, about $715 million came from gains on its own crypto.
Before the next day’s open came reports of a record $6.3 billion theft at Binance.
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Good for share, bad for earnings
On Nov. 3, Goldman Sachs named Coinbase among the “best-positioned” to win customers leaving Binance, and Coinbase’s share of crypto trading rose for a fourth straight quarter, to 10.7%. But it earns most when customers trade, and they’re trading less.
Morgan Stanley analyst Michael Cyprys cut the stock to Underweight on Nov. 2 and his target to $120 from $258. “Confidence in the earnings recovery has deteriorated,” he wrote. By his math, Coinbase’s roughly $165 million of transaction revenue through Oct. 25 points to about $607 million for the fourth quarter, about 11% below the $685 million consensus.
Analysts have cut their 2027 estimate to $2.47 a share, from $4.79 at the end of June:
Bitcoin hits Coinbase twice
Bitcoin slid to about $76,000 on Nov. 5 as stocks gave back their post-election rally. That hurts Coinbase twice: customers trade less, and the crypto it holds loses value.
Robinhood has held up best of the three, and crypto is a much smaller piece of its business. Its crypto revenue dropped 55% from a year earlier to $120 million in the third quarter, while total revenue rose 12% to a record $1.42 billion. But options and prediction markets cool off in a selloff too.
Circle shares more of Coinbase’s problem. USDC drove Coinbase’s $307 million of stablecoin revenue last quarter, about a quarter of the total, and Circle said on Nov. 4 that USDC in circulation ended September flat from a year earlier. Any drop in balances since the hack hits both.
Wait for the trades to come back
Coinbase still trades at about 80x forward earnings, and the Street’s average target has nearly halved in a year, to $199:
The selling doesn’t look overdone yet. Trading needs to recover in the fourth-quarter report, due early next year, before that multiple looks worth paying.
Of course, Bitcoin moves fast in both directions: it topped $81,000 on Wednesday, Nov. 4.
So what is Coinbase stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
