Coinbase Jumps 17% Post-Earnings; Analysts Praise Results but Worry About Regulatory Uncertainty

Coinbase (COIN) shares are up sharply after the company’s first quarter results topped analyst estimates on both revenue and loss per share.

“Overall, we were pleased with the result and would characterize the near-term financial outlook as a modest positive to expectations,” Devin Ryan, JMP Securities financial technology research director, wrote in a note to investors. “Given the continuation of a challenging environment, coupled with all the regulatory headlines, it was nice to see a relatively clean quarter with respectable results, all things considered.”

The crypto exchange Thursday evening reported Q1 adjusted loss per share of $0.34 versus forecasts for a loss of $1.45. Revenue for the quarter of $773 million topped estimates of $655 million and was up 23% from the fourth quarter.

Barclays’ analyst Benjamin Buddis was particularly impressed by the increase in interest yield that resulted from higher spreads on certain "simple" (i.e., non-Advanced Trade) trades that rolled out through Q1. While the trend “may not be sustainable long term,” he wrote, “[it] appears to be fairly sticky for now.”

Analysts at JPMorgan, were somewhat more dour, noting that volumes are under pressure thus far in the second quarter. They also remarked that the decline in USDC market capitalization is worrisome, while staking services aren’t performing as well as anticipated.

“While earnings were meaningfully better than expected, the outlook generally doesn’t seem as good,” they wrote, continuing with a neutral rating on the stock.

Goldman Sachs was also cautious, reminding of the “highly uncertain” regulatory outlook.

“We see risk that limited bandwidth in Congress increases the likelihood that regulatory developments will largely be driven by regulators, rather than policymakers,” the Goldman team wrote. “Thus, we see limited near-term catalysts for increased retail engagement, adoption in the U.S.”

Goldman maintained its sell rating on shares given the “lack of visibility around organic growth” and continuing uncertainty about the impact of regulation. The bank, however, increased its 12-month price target to $45 from $40, still about 20% lower than the current price of $57.60.

For its part, Coinbase has been extremely active advocating for better regulatory transparency in Washington D.C., continuing those efforts even after receiving a Wells Notice from the U.S. Securities and Exchange Commission (SEC), informing the company of plans to pursue an enforcement action against the exchange and its staking services.

Shares were ahead 17% early Friday afternoon, reversing some sizable losses over the past six weeks and now higher by 70% year-to-date.