Cryptocurrency exchange Coinbase Global Inc. (COIN) will continue to face headwinds as the company is set to release its first-quarter results on Tuesday after the market closes.
Coinbase warned investors earlier during its fourth-quarter earnings report that it expects a decline in trading volume and monthly transaction numbers due to a drop in crypto asset volatility and macroeconomic factors. As a result, Wall Street analysts have mostly lowered their earnings and volume estimates ahead of Tuesday's release.
According to FactSet, analysts' consensus estimate for Coinbase's first quarter is $1.5 billion in revenue and an adjusted earnings loss of one cent per share.
"Despite the downturn in crypto activity, [the first quarter] was characterized by few sudden price swings that could lead to higher volumes amid increased volatility," John Todaro, an equity research analyst at investment bank Needham & Co. said in a note to clients. "Instead, the period was characterized by a steady, sustained decline, with periods where markets moved within a range, resulting in relatively muted volumes."
Todaro expects total trading volume for the first quarter to be $322 billion, compared with his previous forecast of $355 billion. He maintains his buy rating on the stock.
The start of the second quarter has also failed to inspire analysts, and some expect further headwinds from Coinbase's outlook.
"COIN's average daily trading volume so far in the second quarter was $2.3 billion, down about 30% from the first quarter," Dan Dolev, equity research analyst at Mizuho, said in a note to clients earlier this week. "On a full-quarter basis, this would imply a volume of about $210-215 billion for Q2."
Dolev says consensus revenue expectations for Q2 are "overly optimistic" and maintains a Neutral rating on Coinbase's shares.
NFT launch.
Coinbase's NFT segment will attract some attention as investors take a look at early days and user engagement. The company recently launched its beta version, which showed low usage statistics.
Still, some are optimistic that Coinbase's NFT segment will help make the company a one-stop store for mainstream crypto adoption.
"The NFT move also underscores our continued view that perhaps the most 'boring' part of the COIN investment case at this point is the spot price of bitcoin, and that the future for this innovative company is much broader and more inclusive than just the leading digital asset and associated trading volumes," Canaccord Genuity analyst Joe Vafi told clients in a note near the end of April.
Shares of Coinbase are down nearly 60% this year, while the broader stock market and Nasdaq continue to decline, with the Nasdaq down about 22%. Meanwhile, the price of Bitcoin has fallen 26% over the same period.