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Coinbase relies heavily on trading volumes to generate fees that help account for much of its revenue. However, in a note to clients, the Oppenheimer analysts estimated that these volumes will decline by 56% on an annual basis in the April to June period.
As a result, the analysts lowered their expectations for second-quarter revenue to $610 million, down from $641M. Adjusted earnings before interest, taxes, depreciation and amortization are also now seen at $29M, below the prior projection of $30M.
The anticipated slide in quarterly trading volumes comes despite a rise this year in the price of Bitcoin. The world’s largest cryptocurrency has increased in value by more than 82% in 2023, spurred on by renewed investor confidence following a credit crunch last year. Reports that fund managers, including BlackRock (NYSE:BLK), are planning to launch a spot Bitcoin exchange-traded fund listed in the U.S. have recently given additional support to the digital token.
Heading into the publication of Coinbase’s next earnings report, the Oppenheimer analysts said they are “cautious” but noted that they like the stock “as an exposure to the long-term opportunity” in the blockchain technology that underpins Bitcoin.
U.S.-listed shares in Coinbase slipped in early dealmaking on Monday.
