Coinbase Stock Analysis and Earnings Preview: Buy or Sell?

Coinbase stock price has crashed into a bear market this year as the recent momentum in the crypto industry waned. COIN has plunged by 25% from the year-to-date high and is now hovering near its lowest level since September 29. This article explores what to expect ahead of the upcoming earnings.

Why Coinbase Stock Price Has Crashed

Coinbase share price has plummeted into a bear market as concerns about its growth trajectory persist. Its crash accelerated in August after the company published mild financial results.

The numbers revealed that Coinbase’s revenue decreased by 26%, with its transaction and subscription and services revenue falling by 36% and 6%, respectively. This slowdown occurred as Bitcoin and most cryptocurrencies remained under pressure in the final quarter.

There are also signs that the company is facing substantial competitive pressure. While its transaction revenue slowed in Q2, Kraken recorded a 14% revenue growth, while Robinhood’s crypto business rose by almost 100%.

Most recently, Coinbase share price has crashed because of the ongoing crypto weakness. Bitcoin price has moved into a correction by alling from a record high of $126,300 earlier this month to $110,000 today.

Most altcoins have also plummeted by over 50% from their peak in September. Most of this decline happened on October 11 when over 1.6 million traders were liquidated. Total liquidations on that day stood at over $20 billion.

The volume in the crypto industry has plunged since then as many investors have remained in the sidelines. Data compiled by CoinMarketCap shows that the 24-hour volume plunged by 14% to $155 billion. The futures open interest has also plunged.

These numbers indicate that Coinbase’s transaction revenue is likely to remain weak, particularly in the fourth quarter.

COIN stock has also declined due to the ongoing government shutdown. One unintended consequence of the closure is that the Securities and Exchange Commission (SEC) has not approved numerous altcoin ETFs.

Coinbase would be a major beneficiary of these ETFs, as it is the largest custodian.

COIN Earnings Preview

The next important catalyst for the Coinbase stock price is its upcoming third-quarter earnings. These numbers will provide more color on whether the company’s business returned to growth in the quarter.

Wall Street analysts expect these numbers to show that its revenue jumped by 49% in Q3 to $1.8 billion. This growth will be attributed to its acquisition of Deribit, one of the leading players in the futures and options market.

Coinbase’s earnings-per-share (EPS) is expected to move from 28 cents to $1.18. However, analysts predict weak guidance, with the fourth-quarter revenue expected to drop by 16% to $1.9 billion.

In addition to the headline figure, the Coinbase stock price will also react to any update on the Base token launch. Brian Armstrong, the CEO, has confirmed that they may launch an airdrop for Base, the biggest layer-2 network in the industry.

Such a move will unlock substantial value, as Base does not generate a significant amount of revenue. Coinbase will also provide more details about its acquisitions of BVNK and CoinDCX.

Coinbase Share Price Technical Analysis

The daily timeframe chart indicates that the Coinbase stock price has declined over the past few days. It has moved below the 50-day Exponential Moving Average (EMA) and is below the Supertrend indicator.

Coinbase has also moved below the 38.2% Fibonacci Retracement level, a sign that bears are in control. It is hovering at the strong pivot reverse level of the Murrey Math Lines tool.

Therefore, the most likely Coinbase share price forecast is bearish, with the next key support level to watch being at $292, the lowest level in August, and the 50% Fibonacci Retracement level.

On the other hand, a move above the psychological level at $350 would invalidate the bearish forecast and point to further gains, potentially reaching the key resistance point at $400.