Coinbase shares slip on weak results: JPMorgan says ‘buy’

Shares of Coinbase Global Inc (NASDAQ: COIN) tanked nearly 15% in extended trading on a massive sequential decline in its quarterly revenue.

Q3 financial performance

Coinbase said its revenue printed at $1.31 billion in Q3 versus a quarter-ago figure of $2.23 billion. Transaction revenue came in at $1.09 billion compared to the second quarter’s $1.93 billion. The crypto company reported $405.3 million in profit that translates to $1.62 a share.

According to FactSet, experts had forecast $1.82 of EPS on $1.61 billion in revenue. Both figures, however, represented significant growth on a year-over-year basis.

Bitcoin made up 19% of the total quarterly trading volume, Ethereum 22%, and the remaining 59% was attributed to other crypto assets.

MTUs, trading volume, and future guidance

Coinbase still showed resilience in the third quarter, with crypto-trading volumes down about 30% versus 40% for the industry at large. It had 7.4 million monthly transacting users (MTUs) versus 6.85 million expected and 8.8 million in the prior quarter.

The U.S. firm had already guided for a hit to MTUs and volumes in Q3 but said both metrics surpassed expectations in October as it guided for a strong holiday quarter. For the full year, it expects up to 8.5 million MTUs and annual net transaction revenue per user each month to average at just under $60.

What the company said in its shareholder letter

Commenting on the quarterly results, Coinbase said in its shareholder letter:

Earlier this week, JPMorgan’s Kenneth Worthington said a sequential hit to Coinbase was likely in Q3 but reiterated his “overweight” rating on the stock and slightly raised his price target to $375 that represents an over 20% increase from where COIN is trading after-hours.