What to make of Coinbase’s Q4 2022 earnings
Coinbase ($COIN) beat revenue guidance for their Q4 2022 earnings, but reported lower user demand than the previous year. So, is Coinbase stock headed in the right direction?
Coinbase Q4 earnings
In some rare positive news for Coinbase CEO Brian Armstrong, his cryptocurrency company beat revenue estimates causing $COIN stock to rise in afterhours trading on Tuesday Feb. 21.
$COIN earnings:
EPS of -$2.46
Revenue of $629.1 million vs estimated $588.17 millionTotal Transaction Revenue: $322M
Consumer Transaction Revenue: $309M
Sees Q1 Subscription & Service Revenue: $300M – $325M— unusual_whales (@unusual_whales) February 21, 2023
The revenue gain is honestly a bit surprising considering the massive lull felt in the ‘crypto winter‘ of 2022.
Specifically in Q4, when Bitcoin (BTC) hit lows of $15,599 on Nov. 21. The correlation of Bitcoin to Coinbase stock might not be omnipresent, but for better or worse, the asset classes are linked.
If you’ve been reading Blue Chip Buzz, you’ll know that we’re bullish long-term on Coinbase. I can claim that we are in the minority on this viewpoint, since the bear case seems a lot easier to make at this juncture.
However, we do have Coinbase stock predicted for big things by 2025, and we’re not the only contrarian investors who share that sentiment.
Other Coinbase bulls like Cathie Wood, have been loading the boat with shares of $COIN recently.
Cathie Wood buys 118,695 shares of $COIN today.
— SpacBobby (@SpacBobby) February 14, 2023
When will Coinbase be profitable
With a net loss of 2.62 billion in 2022, becoming profitable seems like a tall ask.
It’s worth noting that 2022 was the best and worst year for crypto though.
It was the best in the sense that crypto has now been fully integrated into main-stream culture. Companies adopted crypto at a massive rate in 2022, signifying global integration is likely.
It was also the worst year for crypto, in that many retail investors experienced massive declines in their crypto wallets, and may never trade the asset class again.
Of course, the future of crypto is uncertain. It’s way less safe than your average run of the mill tech stocks or index funds, but Web3 has the ability to change how we consume content.
With Web3 gaming, NFT’s and more, crypto has a long way to go still.
It likely won’t be in the short-term, but Coinbase could find a way to churn profit if they agree to work with the US government on crypto regulations.
America risks losing it’s status as a financial hub long term, with no clear regs on crypto, and a hostile environment from regulators.
Congress should act soon to pass clear legislation. Crypto is open to everyone in the world and others are leading. The EU, the UK, and now HK. https://t.co/i9WeUZ7K6H
— Brian Armstrong (@brian_armstrong) February 16, 2023
Coinbase’s short-term outlook
Despite being bullish on Coinbase long term, I have to side with the bears on their short-term thesis.
Pending a Gamestop-esq short squeeze, I think Coinbase will trade relatively flat for the rest of 2023, until investor sentiment views the stock market in a favorable light.
Tech investors were treated to some relief early in 2023, but if we’ve learned anything from 2021, let’s not get greedy.
Coinbase stock prediction: Coinbase trades sideways for much of 2023, with the exception of some massive (10%) gain and loss days. Be careful trading this one!
