Coinbase Global is anticipated to announce its seventh consecutive quarterly losses on Thursday. However, there is optimism among investors as the cryptocurrency market appears to be showing signs of improvement.
According to analysts surveyed by FactSet, Coinbase (ticker: COIN) is projected to reveal a loss of 55 cents per share in the third quarter, with revenue reaching $651 million.
Although this indicates a wider loss compared to the second quarter’s 42 cents per share, it is a significant improvement from the $2.43 per-share loss suffered by the company during the third quarter of last year, amidst the deepening crypto market crash.
Over the past year, Coinbase and other cryptocurrency businesses have faced numerous challenges following the peak of the market in 2021. The market crash has resulted in decreased activity among retail customers, who contribute a significant portion to Coinbase’s revenue. Analysts predict that trading volume from these customers will hit an all-time low in the third quarter.
Overall, while Coinbase is expected to announce further losses, the positive performance in the crypto market provides hope for the company’s investors and suggests potential opportunities for growth in the industry.
Coinbase: Riding the Crypto Wave
The crypto market has experienced a surge in recent months, with increasing trade volumes and renewed optimism. Exchanges are hopeful that this positive momentum will continue as the market anticipates the upcoming Bitcoin “halving” event in April. During a halving, the amount of Bitcoin that miners receive for their work is reduced by 50%, historically leading to bull markets in the crypto industry.
In an effort to cater to its global customer base, Coinbase introduced “perpetual futures” for non-U.S. customers in September. This new offering allows investors to easily make leveraged bets on various digital tokens.
Despite these positive developments, Coinbase still faces its fair share of unique challenges. In June, the SEC filed a lawsuit against the platform, accusing it of operating an unregistered securities exchange. Coinbase vehemently denies these allegations. Some analysts have even speculated that a worst-case scenario regulatory crackdown could potentially result in a substantial loss of revenue, up to a third of its current earnings.
Coinbase, however, remains confident in its ability to overcome these regulatory hurdles and has ambitious plans to expand beyond just trading. The company envisions itself as a central hub for all things crypto-related. As part of this vision, Coinbase has launched a staking service, allowing investors to earn yield by staking their tokens. Additionally, they have developed their own blockchain called Base, providing developers with a platform to build upon.
While the long-term success of Coinbase may hinge on resolving its regulatory challenges, in the short-term, a crypto bull market could greatly benefit the company.
