Coinbase Reports Solid Q2 Results on Higher Trading Volume

Cryptocurrency exchange platform Coinbase Global’s (COIN) second-quarter 2021 results easily surpassed the Street’s expectations on robust trading volume.

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Coinbase reported earnings of $6.42 per share in the second quarter, much above the Street’s expectations of $2.24. Total revenue came in at $2.03 billion, beating the consensus estimate of $1.77 billion.

Retail transaction revenue stood at $1.8 billion, up 26% from the prior quarter, on higher retail monthly transacting users (MTUs). Subscription and services revenues rose 82% to $103 million.

Retail MTUs grew to 8.8 million, up 44% from the previous quarter, on the back of product launches, marketing efforts and the growing number of crypto assets supported by the company for trading. Trading volume increased 38% sequentially to $462 billion. (See Coinbase stock charts on TipRanks)

“Coinbase has our eye on the future and is investing to ensure we are bringing the next generation of products to all so we can increase economic freedom in the world,” the company stated in its earnings release.

The company expects retail MTUs and total trading volume to be lower in the third quarter as compared to the second quarter. For the full year 2021, the average MTU is expected to be in the range of 5.5 million to 8 million, depending on crypto market capitalization and asset price volatility.

It further expects meaningful growth in institutional revenues to be driven by transaction and custody revenue based on increasing volumes of institutional onboarding, increased capital allocations to crypto and higher trading volumes from existing clients.

Additionally, Coinbase expects technology and development, and general and administrative expenses to be between $1.3 billion and $1.6 billion.

Following the results, Rosenblatt Securities analyst Sean Horgan reiterated a Buy rating on the stock and raised the price target to $420 from $400. The new price target implies 55.8% upside from current levels.

Horgan said, “It is clear that COIN has a long-term focus, and is not going to guide based on monthly or quarterly trends. One thing we take away from this call is that COIN is more focused on being a digital wallet, offering a full suite of products to retain its users and monetize over time (a sentiment we strongly agree with).”

The rest of the Street is cautiously optimistic about the stock with a Moderate Buy consensus based on 11 Buys, 2 Holds and 1 Sell. The average Coinbase price target of $67.03 implies 28% upside potential.