Exclusive: Coinbase Full-year Results Likely to Disappoint the Market

Crypto exchange Coinbase is set to give out its fourth quarter and full-year results on February 15th. Expectations around the largest crypto exchange’s results and outlook have been mounting up. However, BitSave CEO and Crypto Asset Manager, Zakhil Suresh says that Coinbase’s upcoming results might not be as good as the market expects it to be.

Coinbase’s earnings to probably fall short of expectations

Coinbase’s upcoming results on February 15th will shed light on the larger crypto markets as well. At present the firm is anticipated to record a quarterly loss of $0.06 per share according to Zacks Equity Research. The number indicates a 97.6% upward change from the previous year. Expected revenues are $731.94 million, 16.4% more than the same quarter last year. Currently, if the estimates were to come true then the next priced question is when will the biggest crypto exchange will swing to profit? Coinbase has been reporting continuous losses since Q1 of 2022. This has worried investors about the actual profitability of the company.

Zakhil Suresh, BitSave CEO and Crypto Asset Manager in an exclusive interview with CoinGape said that there hasn’t been a lot of upside in trading last year. Due to this the trading volume for Coinbase, one of the main metrics to judge a crypto exchange, could be flat.  He also added that the year-on-year result for Coinbase is not anticipated to be better than 2022 and the current results might not reflect a very bullish sentiment.

What should investors look at?

Crypto market players and those who have invested in Coinbase stock will keenly eye a few metrics of the company. These include the trading volume and the fees generated. For any crypto exchange, the fee is the biggest source of revenue. Currently, Coinbase offers a good product range. A good metric to understand the company’s growth would be the product revenue. Out of all newly launched Bitcoin ETFs, 8 of them are using Coinbase custody so seeing the revenue generation from there is important. Zakhil Suresh believes that even if the trading fee for the firm might be low for the full year and the quarter, the ETF revenue generation should likely cover it up.

Another key component of Coinbase’s results will be the outlook of the company. With continuous losses, markets will keenly eye any commentary of estimates that Coinbase might provide regarding its upcoming results, any cash flow positivity, or any capital expenditure that it flags.

Zakhil says that at present the first two halves of the year are not expected to be very positive both for the company and crypto markets. However, he flags that Coinbase has a long-term strategy and usually makes its plans eyeing a future gain. Therefore a long-term view of the firm will be key in analyzing Coinbase’s future cash flow.

Results to clear slate about dented market sentiments

JP Morgan had previously cut Coinbase’s rating, an event that dented market sentiments. The largest cryptocurrency exchange had its rating drop from “neutral” to “underweight.” This is Coinbase’s first analyst rating reduction, and it’s not good. Since the rating downgrade, the market has been trying to gauge a trajectory for the company. The upcoming results have the potential to give a bigger picture of how the firm’s outlook is aligned with the larger market. It will also be a clear picture of whether Coinbase can change the perception of itself and the general crypto market in the eyes of those who are making bearish bets.

Coinbase’s third-quarter 2023 loss of $2.3 million confirmed the company’s gloomy forecasts. Despite a decline in losses from the third quarter of 2022, specialists and financiers remained skeptical. To evaluate the direction of the company and the related cryptocurrency market, Coinbase’s upcoming full-year financial results will be crucial.

How Coinbase’s full-year results impact the crypto industry

Being a sector behemoth, Coinbase’s results will indicate a larger picture of the crypto markets. The key elements like trading volumes, fee generated, cost reduction, and outlook will set a pace for how the company performs in the future. Most fourth-quarter earnings in the US landed as a shock to investors. This included financial market giants like Citi slashing jobs to tech heavyweights like Google posting disappointing ad revenue numbers. Coinbase’s earnings will now set a trajectory on how crypto markets are perceived by a larger investor audience.

Previously when the firm observed a drop in trading volumes for the second consecutive quarter, it caused the company’s shares to fall in after-hours trading. The fall had also kept Bitcoin rangebound, as questions on the legitimacy of the biggest crypto exchange had persisted.