The seasoned cryptocurrency trading platform, Coinbase, is looking forward to an optimistic Q2 earnings, despite the legal pressure brewing in its environment. The firm’s prospects seem to exceed the consensus estimates from the financial data company FactSet which presumes revenues will dwindle to $629 million, a downturn from the preceding quarter’s figure of $773 million. The decrease is seen as a reflection of the lower trading volume projected at $114 million in this period against the $145 million in Q1.
Earnings per share also face a predicted $0.75 fall, from the prior quarter’s $0.34. Yet, a flicker of positivity emanates from British Bank Barclays. The bank projects a superior “adjusted EBITDA” (Earnings Before Interest, Taxes, Depreciation, and Amortisation), significantly overruling the agreed consensus.
The underlying issues, though concealed, cast shadows on Coinbase’s future. The Industry titans experienced a rating downgrade to an underweight position by Barclays last month, as analysts foresaw impending pressures weighing heavily on the company’s financial results. The catalyst for these pressures includes the stark decline in trading volumes compared to the first quarter, as well as the tension surrounding the firm’s partner stablecoin, USD Coin (USDC).
Coinbase proposes a 4% reward to USDC holders, with a sliver of the earnable interest income resulting from these tokens and their reserves. However, fundamentals remain challenged with uncertainties moving forward in their stride.
On the flip side, the less favourable aspects of these dynamics should not overshadow Coinbase’s admirable performance. The company is flourishing, registering a remarkable 173% rise in the year to date. A characteristic trend is observed between the price of Bitcoin (BTC) and the company’s shares, with BTC witnessing a 76% surge this year. This pairing’s relevance became more noticeable following the inclusion of Coinbase as a surveillance-sharing partner by Bitcoin spot ETF applicants in June – including BlackRock.
Although Coinbase was borne down upon by a lawsuit from the Securities and Exchange Commission (SEC) that same month, a turn of events following Ripple’s legal victory against the agency improves their legal prospects. The ruling declaring the XRP token as not a security brings a ray of hope for many other alleged “securities” on Coinbase’s platform, potentially granting them refuge from regulatory onslaughts.
Source: Cryptonews
