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Coinbase Q1 earnings: what to watch after prices reach all-time low?

Coinbase is currently trading at a super-discounted P/E ratio of only 8.6, compared to 150 times one year ago. Will the upcoming Q1 earnings overturn the momentum or keep pushing the price lower?

When is the report date?

Coinbase Global Inc (All Sessions) is estimated to report its earnings on May 10, 2022, after market close.

What to expect?

Based on six analyst forecasts at the Zacks Investment Research, the consensus EPS forecast for the quarter is $0.74. The reported EPS for the same quarter last year was $3.05.

2021 was a year of tremendous growth and development for Coinbase. Both the number of its users and total revenue grew at a jaw-dropping 500% plus rate. In addition, the strong performance across Coinbase’s key metrics has seen its net income turn ten-fold. Overall, Coinbase Global is a very profitable business by all measures.

Rolling into 2022, the company is expecting its trading volume to decline substantially to 200 billion USD, given that the crypto market capitalization is down by 20%. Coinbase also sees a lower number of retail MTUs at roughly 10 million down from the 11.4 million in Q4. A similar pattern is anticipated to be shown in the revenues from subscriptions and services.

On the expense side, increased miner expenses will be a crucial factor in driving up the cost due to the network congestion and elevated account verification expense.

What to watch?

Overall, the leading crypto trading platform is foreseeing a challenging time ahead which has been reflected in its stock price. Coinbase's share price sits at its all-time-low level near $103 after dropping 70% from its all-time high six months ago. Coinbase is currently trading at a super-discounted P/E ratio of only 8.6, compared to 150 times one year ago.

However, putting aside the performance in the stock market, there is more to watch for the business.

The global crypto economy is still at its infancy stage and thus facing the strong headwind as it faces the global macroeconomic challenge, rising interest rates, inflation, and geopolitical instability - all of which deteriorates the appetite for risk. However, looking through the current haze, a company like Coinbase is likely to be a major beneficiary of the industry's explosive growth once the headwind fades.

Moreover, the company's diverse front-edge products will add tremendous value to the business when its time comes. For example, Coinbase is now officially the biggest NFT platform, an industry that is expected to grow 30.72% year by year. Therefore, the NFT platform could add more than $45 billion to Coinbase's market capitalization, and as of now, it is not priced in yet. Besides Coinbase Ventures, FairX, Coinbase One, and Coinbase Cloud are all waiting in the pipeline to shine.

Technical Analysis

There’s little doubt that the share price of Coinbase still bears the risk of moving downwards in the near term. Looking at the daily chart, we can see that the price dropped so violently from April to follow the path of Bitcoin.

With the price tumbled to its floor level, the technical will take a back seat to forecast how much lower it can be. While on the flip side, a retest of the $130 may help restore some confidence, but the descending trend line on the daily chart will exercise its resistance for such a move.

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This information has been prepared by IG, a trading name of IG Australia Pty Ltd. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

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