Coinbase Q3 Preview: Product Diversification, Acquisitions Create 'A Compelling Opportunity'

Core Viewpoint - Coinbase Global Inc is expected to report strong trading volume and financial results for the third quarter, driven by Bitcoin reaching new highs during this period [1][8]. Earnings Estimates - Analysts predict Coinbase will report third-quarter revenue of $1.79 billion, an increase from $1.21 billion in the same quarter last year [2]. - The expected earnings per share (EPS) for the third quarter is $1.13, up from 73 cents per share in the previous year [3]. Analyst Insights - Several analysts have lowered their price targets for Coinbase ahead of the earnings report, with Rosenblatt's Chris Brendler reducing the target from $470 to $450 while maintaining a Buy rating [4]. - Brendler noted that the third-quarter results may be less significant than future guidance, particularly regarding the Derebit acquisition [5]. - BTIG initiated coverage on Coinbase with a Buy rating and a price target of $410, highlighting the company's potential to bridge crypto and traditional finance [6]. Growth Areas - Analysts identified three major growth areas for Coinbase: the development of the Base App, stablecoin adoption, and the rapid scaling of the derivatives business [7]. - The company has diversified its revenue streams in recent quarters, which could enhance its financial stability [7]. Key Items to Watch - The report will cover the months of July, August, and September, during which Bitcoin reached an all-time high of over $123,000 in August, likely contributing to strong trading volumes [8]. - The results may influence investor sentiment and trading behavior following the earnings announcement [8]. Regulatory Environment - Coinbase CEO Brian Armstrong has been actively advocating for cryptocurrency regulation, expressing optimism about a potential bill being passed by the end of 2025 [9]. Recent Acquisitions - Coinbase completed the acquisition of Derebit in the third quarter and is also acquiring blockchain fundraising platform Echo for $375 million, which may impact future guidance and financial outlook [10]. Recent Performance - Following a second quarter with declines in transaction revenue, subscription and services revenue, and trading volume, Coinbase aims to demonstrate a rebound in these areas for the third quarter [11].