Coinbase Faces 44% Trading Volume Drop in Q2

Coinbase Global is expected to face a challenging second-quarter earnings report, with analysts at Oppenheimer describing the setup as "unfavorable." The cryptocurrency exchange is projected to experience a significant decline in trading volumes and revenues, falling short of Wall Street estimates. Oppenheimer has revised its trading volume estimate for the quarter ending in June to $220 billion, down from its earlier forecast of $230 billion and well below the consensus estimate. This represents a 44% drop from the previous quarter and a 3% year-over-year decline. Additionally, Oppenheimer has lowered its revenue forecast for Coinbase to $1.42 billion, compared to the $1.67 billion expected by analysts. The company is scheduled to report its earnings later this month.

Oppenheimer analysts Owen Lau and Guru Sidaarth noted that while the setup for Coinbase's second-quarter earnings report appears unfavorable, the investment community is already aware of the potential weak performance and downward revision in earnings estimates. Despite the short-term challenges, Coinbase's diversified growth avenues, particularly in derivatives and international exchange notional volumes, offer support for its long-term prospects. These areas, though currently contributing minimally to revenue, are seen as key drivers for future growth. Oppenheimer maintained its "outperform" rating on the stock and raised its price target from $395 to $417, suggesting that a more attractive entry point for investors may emerge after the upcoming earnings release.

Coinbase's shares have surged more than 100% since the start of the year, driven by several factors including its inclusion in the S&P 500, improving regulatory visibility, and the broader rise in digital asset prices. The recent rally in crypto assets, fueled by anticipation of key legislation under consideration in the US House of Representatives, has further boosted investor optimism. Three major bills—the Clarity Act, the Genius Act, and the Anti-CBDC Surveillance State Act—are scheduled for review this week as part of "Crypto Week." The Clarity Act, in particular, is seen as potentially transformative, as it could spur the widespread adoption of digital assets by institutional investors by addressing long-standing concerns over regulatory ambiguity.