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Wednesday, August 10, 2022

Coinbase: Subdued June Trading an Ominous Sign for Q3

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The summer season is in full swing but in the crypto sphere the talk has turned to whether crypto winter might be here already.

It’s hard to tell whether the crypto market is about to go into one of its drawn out down periods or whether the bull market has just paused now that Bitcoin has steadied following its steep drop.

Mizuho Securities’ Dan Dolev has been pondering the current state of the crypto market and going by the trading volume decline at Coinbase (COIN), the analyst thinks crypto spring is on hold for now.

“Following outsized trading volumes in April and May, the crypto winter that began in June still reigns as 3Q knocks on the door,” the 5-star analyst said. “While 2Q volumes should be elevated, meager crypto volumes lingering bodes poorly for the remainder of 2021.”

Dolev thinks April and May’s activity will manage to paper over June’s cracks when the company reports Q2 earnings. While In June, Coinbase’s average daily trading volumes were just $2.9 billion, in April and May combined, average daily trading volumes reached $5.9 billion, boosted by two weeks in May when average daily volumes hit $9.5 billion.

Therefore, Dolev thinks Coinbase can deliver total revenue of up to $2.1 billion in 2Q, which will be roughly 15-20% above the $1.8 billion consensus estimate.

However, it is the current quarter which concerns Dolev, who says that if the June trend continues throughout Q3, it will result in $1.2 billion of total revenue, which is 16% below the Street’s forecast.

As such, while the analyst raised his Q2 revenue estimate by $400 million to $2.044 billion, the Q3 forecast is lowered by $100 million to $1.211 billion.

There’s no change, however, to Dolev’s rating, which stays a Neutral (i.e., Hold), or price target which remains at $225. The figure suggests downside of 6% from current levels. (To watch Dolev’s track record, click here)

Most analysts disagree with Dolev’s thesis. Based on 11 Buys, 4 Holds and 1 Sell, the stock boasts a Moderate Buy consensus rating. The average price target remains a bullish one; at $38.93, the forecast is for one-year gains of 59%. (See Coinbase stock analysis on TipRanks)

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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

The post Coinbase: Subdued June Trading an Ominous Sign for Q3 appeared first on TipRanks Financial Blog.

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