Should you buy Coinbase stock after weak earnings?

on Nov 10, 2021
  • The Coinbase stock price crashed by more than 15% after weak earnings.
  • Coinbase revenue of $1.31 billion was lower than estimates.
  • It has formed a break and retest pattern on the four-hour chart.

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The Coinbase (NASDAQ: COIN) stock price crashed by more than 15% in extended hours after the company published weak quarterly results. The stock crashed to a multi-week low of $300, which was the lowest it has been since October 27th. 

Coinbase earnings

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Coinbase is the second-biggest cryptocurrency exchange in the world after Binance. The company offers its solutions to both individual consumers and institutions. It makes most of its money through the normal commissions it charges its customers.

Coinbase had a relatively weak quarter as the volume of transactions declined dramatically. The company said that its revenue rose by 315% year-on-year to more than $1.31 billion. This was substantially lower than what analysts were expecting. It missed by about $270 million.

Coinbase made a profit of $1.62 per share, which was better than estimates. Its monthly transacting users was 7.4 million, which was lower by about 16%. At the same time, volume crashed by 29% to more than $329 million. It ended the quarter with assets worth more than $255 billion of revenue. 

There were some other positives. For one, the company announced that its subscription and services revenue jumped by 41% to more than $145 million. Its custody services also did relatively well.

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Still, Coinbase a closer look at the cryptocurrencies market shows that a weak performance was expected. In the first part of the second quarter, we saw substantially low volumes as cryptocurrency prices stagnated. At the same time, companies like Square and Robinhood delivered weak crypto results. This was a signal of what to come.

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Therefore, there are some positive signs that the Coinbase stock price will rebound. Besides, the volume of cryptocurrencies traded has recovered sharply in the fourth quarter. At the same time, the prices of most digital currencies like Bitcoin and Ethereum have recovered. 

Coinbase stock price analysis

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Coinbase stock price

The four-hour chart shows that the Coinbase stock price declined sharply in extended hours. The stock dropped to about $300 after earnings. The stock approached the key support level at $294. This was an important level since it was the highest point in August. It was also its previous all-time high. 

The MACD formed a bearish divergence pattern while the price crashed below the 25-day moving average. Therefore, this pattern seems like a part of break and retest pattern. This is usually a bullish sign. As such, there is a likelihood that the stock will resume the bullish trend in the coming days.


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