Summary
- Coinbase is expected to report a steep decline in its revenue for the last quarter of 2022 due to plummeting transactions and crypto prices.
- Wall Street analysts expect Coinbase’s revenue to drop more than 75% compared to the same quarter in 2021, reaching $588.6 million.
- Regulatory pressure on crypto exchanges has downgraded Coinbase’s stock from Buy to Neutral, and its debt one position from “BBB” to “BB-,” moving it from “investment grade” to “speculative grade.”
Expected Revenue Drop
Coinbase is set to report results for the latest quarter of 2022 after the market close on Tuesday. Wall Street analysts expect the exchange’s revenue to drop more than 75% compared to the same quarter in 2021, reaching $588.6 million. Furthermore, Coinbase is estimated to post a loss of $568.1 million for the fourth quarter. In comparison, the exchange reported a net income of $840 million in the fourth quarter of 2021 and $177 million in profit for 2020. The platform is predicted to bring in a total of $235.4 million from subscriptions and services, which roughly accounts for 40% of its total revenue. In the same quarter of 2021, less than 10% of the company’s overall revenue came from these business lines.
Decline in Total Assets
Likewise, Coinbase’s total assets are expected to come in at $88.8 billion, the lowest amount in more than two years. The decline is largely attributed to dwindling crypto prices as well as exacerbating user trust in centralized crypto platforms following the unprecedented collapse of FTX, once the third-largest exchange in the world.
Downgrade on Stock and Debt
Analysts for JPMorgan and D.A. Davidson have downgraded Coinbase’s stock from Buy to Neutral, arguing that regulatory pressure is “just getting started.” This comes as previously S&P Global downgraded Coinbase’s debt one position from “BBB”to “BB-” earlier this year moving it from “investment grade”to “speculative grade” Chris Brendler an analyst with D.A.,Davidson claimed that while Coinbase could benefit from a clear regulatory framework he said that near-term path looks increasingly treacherous”.