Wall Street experts reduce Coinbase price forecasts following Q4 shortfall — yet shares increase.

Barclays, Benchmark, Clear Street, and JPMorgan all lowered their targets, attributing this to weak retail trading and macroeconomic challenges.

Key points:

• Coinbase shares increased by 12% despite the firm falling short of revenue and profit expectations for the fourth quarter, alongside significant impacts from unrealized crypto and strategic investment losses.
• Multiple analysts have reduced their price targets, highlighting pressures related to near-term earnings and consumer monetization.
• Nevertheless, analysts noted the company’s expanding derivatives business, stablecoin presence, and subscription services as indicators of a more varied business model.

Coinbase (COIN) shares experienced a 12% surge on Friday, even though the cryptocurrency exchange did not meet fourth-quarter earnings predictions, as analysts displayed a blend of concern over immediate challenges and optimism regarding the company’s developing business model.

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The firm reported net revenue of $1.71 billion, which fell short of Wall Street’s forecast of $1.81 billion, while its adjusted EBITDA was recorded at $566 million, missing the expected $653 million.

Coinbase disclosed a net loss of $667 million according to generally accepted accounting principles (GAAP), largely due to a $718 million unrealized loss on its cryptocurrency investment portfolio and a $395 million loss from strategic investments.

Barclays analyst Benjamin Budish described Q4 as “a miss across the board,” citing weak transaction and subscription revenue along with higher-than-anticipated operating expenses. Budish revised his price target down to $149 from $258, indicating that trading activity, stablecoin-related interest income, and crypto asset prices are still crucial to Coinbase’s performance.

However, he recognized positive trends, such as an increase in Coinbase’s share of the USDC market cap, a rising subscriber base for Coinbase One, and ongoing share buybacks, which lowered the share count by approximately 8% quarter-over-quarter.

Benchmark’s Mark Palmer expressed a more optimistic long-term perspective. While the overall results did not meet expectations, Palmer pointed to the expanding derivatives business, broader product offerings, and stablecoin adoption as indicators that the company is becoming increasingly “diversified and durable.” He maintained a buy rating on the stock but reduced his price target to $267 from $421.

Clear Street’s Owen Lau remarked that Coinbase’s consumer monetization is facing challenges, with the retail take rate declining from 1.43% in Q3 to 1.31% in Q4. This decrease, influenced by a transition to advanced trading tools and the Coinbase One subscription model, lowered per-trade revenue but was somewhat balanced by enhanced engagement and cross-selling. He lowered his price target to $277 from $344, pointing to a prolonged downturn in the crypto market, diminished retail participation, and a more hawkish macroeconomic landscape.

Despite the disappointing results, Lau stated that Coinbase’s long-term positioning appears more robust. The company now boasts 12 business lines generating over $100 million in annualized revenue, with two exceeding $1 billion. Its base-layer network, derivatives platform, and expanding stablecoin infrastructure indicate potential utility beyond just trading, he suggested.

JPMorgan also adjusted its price target for COIN following the report, citing short-term earnings pressures.

Nonetheless, Coinbase reiterated its commitment to maintaining adjusted EBITDA positivity throughout various market conditions, backed by $14.1 billion in total available resources. Management noted that it continues to repurchase stock and accumulate bitcoin BTC$66,560.23 utilizing a portion of its operating income.