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Coinbase experienced a substantial fall in stock price amid several macroeconomic factors that also affected US equities and crypto.
Amid the declining state of US equities, Coinbase Global Inc (NASDAQ: COIN) stock price plunged more than 20% on Monday to a record low. As of press time, the American crypto exchange’s shares were changing hands at around $83.51, after recovering from an $81.84 low.
The Coinbase stock price decline came a day before the leading crypto exchange reports its earnings for the first quarter of 2022. Coinbase will expectedly post these financial results after the close of market on Tuesday. However, analysts expect some headwinds due to the weakening crypto market. For instance, leading digital currency Bitcoin (BTC) was trading 10% lower and is currently at $30,964. In addition, the UST stablecoin was also at a new low below the $1 parity. According to Binance market data, the algorithmic stablecoin was changing hands at a low of $0.9202.
Reduced Numbers for Coinbase Stock Price
In the company’s recent fourth-quarter earnings report, Coinbase already warned investors of lower numbers for trading and active monthly users. In addition to the crypto market’s volatility, the exchange also cited other macroeconomic factors. Consequently, Wall Street analysts have markedly lower earnings and volume estimates for Coinbase going into Tuesday’s release.
According to FactSet, the general consensus estimate for Coinbase’s first-quarter earnings is $1.5 billion in revenue. In addition, the financial data and software company also forecasts an adjusted earnings loss of one cent per share.
Commenting on the peculiarity of the first quarter, John Todaro, an equity research analyst with investment bank Needham & Co, explained:
“Despite the downturn in crypto activity, [the first quarter] was marked by few sudden price swings which can lead to higher volumes on increased volatility. The period was instead marked by a steady, continuing decline with periods of range-bound markets leading to relatively muted volumes.”
Todaro’s estimate for Coinbase is an overall trading volume of $322 billion in the first quarter. This figure is substantially down from his initial estimate of $355 billion. Tornado also maintained his “buy” recommendation for Coinbase’s stock.
As the second quarter comes into view, analysts expect more challenges for Coinbase, with equity research analyst at Mizuho, Dan Dolev, saying:
“Average daily trading volumes on COIN have averaged $2.3 billion thus far in 2Q, approximately 30% below 1Q levels. On a full-quarter basis, this would imply about $210-215 billion of volumes for 2Q.”
Coinbase shares have fallen almost 60% this year.
Other Related News
Coinbase was not the only entity to experience market volatility on Monday, as all leading US indices reported declines. For instance, the Nasdaq Composite was down by more than 4% at the time of writing, ceding around 493 points since the open. In addition, the S&P 500 and the Dow Jones Industrial Average (DJIA) were down 3% and 1.8%, respectively. The general decline is an extension of last week’s debilitating performance, generally attributed to key macroeconomic factors. These include the war in Ukraine and the US Federal Reserve’s decision to raise interest rates.