Coinbase Global Inc. could challenge Wall Street by achieving profitability for the first time in two years. This potential success is due to the resurgence of Bitcoin and the cost-saving measures implemented during the previous downturn in the cryptocurrency market.
John Todaro of Needham & Co. anticipates that the biggest US crypto exchange will report a net income of $103 million in its upcoming fourth-quarter results, which contrasts with the projections of many analysts surveyed by Bloomberg. These analysts forecast a loss of approximately $16 million, or 5 cents per share, for Coinbase.
In the last quarter, Bitcoin surged by almost 60%, marking a 157% annual increase leading up to the launch of US exchange-traded funds focused on cryptocurrency in January. The impact of these ETFs on Coinbase’s long-term performance remains uncertain.
It saw 100% more trading volume during the quarter versus the third quarter. Fourth-quarter volume amounted to $154 billion, ahead of the estimate of $142.7 billion.
Owen Lau, an analyst at Oppenheimer & Co., believes that perceptions of Coinbase as an unprofitable company may be changing, especially if the exchange reports a profit.
Despite a nearly fivefold surge in share price last year, Coinbase’s stock has declined by approximately 2.2% since December and remains below half of its record high from 2021.
Lau added, “Coinbase can be perceived to be a much stronger company in 2024 because they were just under very harsh, extreme scrutiny over the past two years from regulators and investors, I do think Coinbase comes out much stronger after this scrutiny.”
Achieving profitability again would pave the way for a potential recovery in 2024, according to Todaro. He predicts a net income of $1.2 billion for the current year, a stark improvement from the estimated $75 million loss in 2023. Despite projecting revenue growth, analysts surveyed by Bloomberg still anticipate a $27 million loss for the year.
Also Read: JPMorgan Upgrades Coinbase to Neutral Amid Crypto Surge
