Coinbase Earnings: Wall Street’s Crypto Darling Faces a Retail Ice Age

by

What to know:

  • If you were hoping for a high-flying Coinbase earnings report, consider lowering your altitude. Wall Street types – those solemn folks who still believe in neckties – are bracing for Coinbase to miss earnings estimates, mainly because retail crypto traders have decided to go on a gap year.
  • Not all is doom and gloom (just most of it): Coinbase’s subscriptions, especially the bits involving USDC interest and a dash of blockchain staking, might cushion the blow. Think of it as a financial airbag. Don’t expect a soft landing, though.
  • Institutional traders and stablecoins tried valiantly to keep the ship afloat, but word is margins are tighter than my waistband after Christmas. Analysts say it looks dicey for retail trends going into Q2, which in crypto years is about a decade from now.

Coinbase (COIN), that plucky crypto exchange you can’t help but root for (unless you bought in at the top), wobbles into its first-quarter earnings with all the confidence of a cat on a Roomba. Four Wall Street analysts think Coinbase will come up short, not least because retail trading is as lively as a Zoom call on a Friday at 4:59 p.m.

The schedule: results drop Thursday after the market closes. Bring snacks and perhaps a comforting beverage. Analysts predict earnings per share will tumble to $1.93 from the previous quarter’s $2.26, with revenue expected at $2.1 billion — which sounds like a lot until you remember last quarter brought in $2.27 billion, according to FactSet. Progress, but not in the right direction.

Last year, first-quarter bliss: $4.40 EPS and $1.2 billion revenue. This year, trading volume is expected around $403.8 billion, down from $439 billion. The mood? More ‘hmph’ than ‘hooray’.

J.P. Morgan, never ones to sugarcoat, hacked their EPS estimate down to $1.59 because Coinbase’s trading fell 10%, and the crypto market cap dropped 17%. (That’s “ouch” in banker-speak.) Still, with crypto losses adjusted out, they whisper promises of $2.39 EPS, mainly because expenses are under control and that sweet, steady subscription revenue just won’t quit.

Barclays and Compass Point are even grimmer, if such a thing were possible. Barclays threw their forecasts in the shredder, especially after January’s market snap-freeze. They see retail volumes at $69 billion—less “bull market,” more “cow grazing.”

Meanwhile, Compass Point fully donned their bear costumes, downgrading the stock to ‘sell’ and estimating transaction revenue at $1.24 billion. Their argument? Coinbase is leaking retail share to DEXs (decentralized exchanges, where ‘central authority’ is a four-letter word). Second quarter? Buckle up.

To add insult to injury, Robinhood also confessed to a 13% drop in transaction revenue between Q4 and Q1, because apparently misery loves company.

Stablecoins to the rescue?

Before you throw your Coinbase socks into the Goodwill bin, there’s a spot of cheer: stablecoins. 🛟

Coinbase’s USDC revenue had a growth spurt as the coin’s market cap swaggered upward some 42%. That alone livened up the subscription revenue column. Barclays spotted $304 million in first-quarter USDC-related revenue—proof perhaps that stability may not be exciting, but it pays the rent. Even the grumpy folks at Compass Point tipped their hats, noting that USDC helped counterbalance the drop in ether staking (which suffered when ether itself did the financial equivalent of forgetting its keys and sleeping on the porch).

Oppenheimer — never to be left out — dialed volume estimates down to $380 billion, but noted Coinbase grabbed more U.S. spot trading market share. Is that good? Absolutely, unless you prefer your market share gains to coincide with people actually wanting to trade anything.

As for the future, analysts are holding their optimism in a hermetically sealed jar. There’s a general worry that decentralized exchanges — especially those built on lightning-fast chains like Solana, or Coinbase’s own Base — are sucking away retail traders with the irresistible promise of new tokens and lower fees. Apparently, even Coinbase’s edge as a regulated, centralized exchange is only so sharp.

So: If you’re waiting for a retail trading surge to save the day… Best get comfy. Reinforcements aren’t coming soon, at least not while the average investor’s portfolio resembles a haunted house. (Nobody wants to go in, and it’s full of things you’d really rather not look at.)

So far this year, Coinbase shares have slumped 23%. They’re wallowing at $198.06, whereas bitcoin, the drama queen of digital assets, has actually crept up 3.8% to $97,023. Apparently even the world’s biggest cryptocurrency is as confused by all this as the rest of us. 🤷‍♂️

Read More

2025-05-07 19:43