Coinbase Reports Strong Q1 Earnings After IPO; Shares Open 6% Higher

Shares of Coinbase Global Inc (COIN) were up around 6% in early trading on Friday as the company reported its first-quarter results after being listed on NASDAQ last month. The cryptocurrency exchange platform company reported revenues of $1.8 billion versus $190.6 million in the same quarter last year. Analysts were expecting revenues of $1.8 billion.

COIN reported net income of $771.5 million in Q1 or diluted earnings of $3.05 per share versus approximately $32 million in the same quarter a year back. Consensus estimates were for diluted earnings of $3.17 per share.

At the end of Q1, COIN had more than 56 million verified users and 6.1 million retail monthly transacting users (MTUs). 39% of the company’s trading volume was made up of Bitcoin (BTC) while Ethereum and other crypto assets made up 21% and 40%, respectively. COIN also plans to add Dogecoin to its platform.

The company expects total trading volume in Q2 to be at least in line with the first quarter’s trading volume while it anticipates its MTUs to be higher than in Q1. In the second quarter so far, COIN’s app has spent over two weeks in the top 10 free apps on the iOS and Android platforms.

For FY21, the company expects MTUs to be in the range of 5.5 million to 9 million. Average net revenue per user (ANRPU) has historically been in the $35 to $45 range each month but considering the strong performance of cryptocurrency in Q1, COIN expects annual ANRPU to exceed these figures. (See Coinbase Global Inc stock analysis on TipRanks)

Following the earnings, Mizuho Securities analyst Dan Dolev reiterated a Hold and a price target of $315 on the stock. Dolev commented on the results, “Results were strong, and the outlook from an MTU perspective has never been more promising. Despite the strength, whopping institutional adoption, the squeeze in retail yields, and management’s commentary citing “competition increasing as new market entrants join the crypto economy every month” will likely continue to cast doubt about the long-term durability of the business model. We expect a muted stock reaction.”

Overall, consensus among analysts is a Moderate Buy based on 7 Buys and 4 Holds. The average analyst price target of $412 indicates upside potential of around 55.4% from current levels.

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