Coinbase Global, Inc. (COIN) stock has been having a good August. Shares of the cryptocurrency exchange platform have been boosted by the rebound in Bitcoin prices, as well as the company’s better-than-expected results for the prior fiscal quarter.
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The stock may well have a path to add to its recent gains and make a move back above $300 per share (the stock sat at $256.83 at close on Monday).
Then again, two key factors could signal lower prices ahead.
First, guidance suggests that results could underwhelm the market in the coming quarter. Second, increased cryptocurrency regulation remains a possibility. Both of these factors could weigh down the stock, which debuted on the NASDAQ back in April. (See Coinbase stock charts on TipRanks)
COIN Stock and Recent Earnings
The rebound in Bitcoin (BTC) played a big role in Coinbase’s rally this month. Since August 1, Bitcoin has climbed nearly 16%, from $39,865 to $46,203, as of Monday.
During this same time, COIN stock has gained around 8.2%. Along with the Bitcoin run-up, the company’s strong quarterly results, released on August 10, played a role in its price movements.
Quarterly revenue of $2.2 billion came in above consensus estimates of $1.85 billion. Earnings per share (EPS) of $6.42 also beat the $2.82 per share expected by analysts.
However, Coinbase’s guidance for Q3 may provide investors reason to proceed with caution.
Outlook, Regulation Could Push Shares Lower
Based on the guidance that accompanied the Q2 earnings, retail trading volume is expected to fall in Q3. That’s bad news, given that the company is still dependent on retail trading commissions for the bulk of its revenue.
Increased signs of crypto-market regulation by the U.S. and other major economies may also sting Coinbase’s bottom line. The U.S. government has already made some attempts to rein in the crypto industry. This was on display with the crypto tax-reporting requirements added to the recent infrastructure spending bill.
Further developments like this could put more pressure on crypto prices, which could spark another round of declines for Coinbase stock.
Wall Street’s Take
According to TipRanks, Coinbase stock has a Moderate Buy consensus rating based on 10 Buys, 3 Holds, and 1 Sell.
The average COIN price target is $362 per share, implying 41% upside potential from current levels. Analyst price targets range from a low of $274 per share to a high of $500 per share.
Bitcoin Bounce Doesn’t Guarantee COIN Rally
Bitcoin’s recent strength may be helping Coinbase stock recover some of its losses. However, there may yet be more rough patches ahead for COIN, despite its strong quarterly results.
Disclosure: Thomas Niel held a Long position in Bitcoin at the time of publication. He did not hold a position in any of the other stocks mentioned in this article.
Disclaimer: The information contained herein is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities.
