Coinbase (COIN) cashed in for the final quarter of 2024.
Shares of the crypto exchange fell slightly to $295.18 each in pre-market trading on Friday, despite a better-than-expected earnings report the night before. The pullback in the stock likely reflects its mixed guidance for the first quarter, where an increase in marketing spending could bring a sequential step-down in profit margins.
But the chatter on Wall Street is that the stock's muted reaction is missing the forest in the trees.
"We think management guided conservatively for the first quarter," JP Morgan analyst Ken Worthington said in a client note.
There are tailwinds for its business: the higher bitcoin prices that also benefited rival Robinhood's (HOOD) quarter this week, and bullishness on the Trump crypto regulatory backdrop, Given those, Coinbase may be set up to surprise in the first quarter.
The crypto exchange's transaction revenue of $1.556 billion in the fourth quarter marked its highest level since the same period in 2021. Retail and institutional trading volume of $94 billion and $345 billion, respectively, hit three-year highs.
Coinbase executives laid out their top policy priorities for the Trump administration on an earnings call with analysts. These include market structure issues such as token classification, and stablecoins, which are cryptocurrencies pegged to a stable asset like the US dollar.
"President Trump is moving fast to fulfill his promise of making US the crypto capital of the planet. And the most pro-crypto Congress we've ever seen is now leading the charge on stablecoin and market structure legislation. Given the US's leadership here, the rest of the world is taking notice and will be under pressure to embrace crypto adoption," Coinbase co-founder and CEO Brian Armstrong said on the call.
Armstrong's bullish assessment of the regulatory backdrop is in line to what he told me at the World Economic Forum just several weeks ago (video above).
Here is what Wall Street is saying about Coinbase's quarter and outlook.
Rating: Hold/Reiteration
Price Target: $300/Reiteration
"On the back of the post-election jump in crypto asset prices, retail trading volume and retail transaction volume grew nearly 3x quarter over quarter (stable take rate) and adjusted operating margins expanded to 57%—the third highest level on record. A more supportive US administration/Congress has created a "sea change" in the regulatory backdrop for crypto. Quarter to date trends suggest another quarter similar to 4Q, but higher sales and marketing spend will drive a step down in margins quarter over quarter."
Rating: Neutral/Reiteration
Price Target: $344/Previous $264
"Given the valuation and potential near-term volatility until we get greater regulatory certainty, our rating is unchanged at Neutral; however, our December 2025 price target jumps to $344 (from $264 prior) driven by our fiscal year EPS number nearly doubling on the higher base the fourth quarter set. Interesting to us is that the volume surge seen post election have largely remained intact, suggesting that this level of velocity, activity and revenue generation levels could be sustainable."
Brian Sozzi is Yahoo Finance's Executive Editor. Follow Sozzi on X @BrianSozzi, Instagram, and LinkedIn. Tips on stories? Email brian.sozzi@yahoofinance.com.
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