Mizuho Financial Group has reduced its revenue projections for Coinbase, citing subdued interest from crypto traders and investors in Q3. This subdued interest is anticipated to have a negative impact on the exchange’s trading volume. In a recent communication to investors, the team of Mizuho analysts, led by Dan Dolev, disclosed their expectation of Coinbase’s Q3 revenue being 10% lower than the current consensus estimates.
Furthermore, they have also revised their revenue estimates for COIN by 7%, now forecasting it to be $609 million. According to their analysis, Coinbase recorded approximately $72 billion in trading volume during the July to September period, significantly lower than their earlier estimate of $88 billion. In fact, the daily trading volume for Coinbase decreased to approximately $900 million in July, $790 million in August, and $665 million in September, in contrast to the Q2 average of $1 billion. Regarding their expectations for the future, the analysts wrote:
“We expect dwindling volumes combined with an expected drought in retail trading to meaningfully weigh on 3Q revenue.”
Coinbase’s Value Erosion: What Lies Ahead?
Additionally, the analysts from Mizuho are maintaining an ‘Underperform’ rating on COIN shares. Their price target stands at approximately $27, which represents a decrease of roughly 63% from the current stock price. However, when looking at the year-to-date performance, COIN has shown significant growth, with an increase of 118.66%. Starting from its lows of around $33 in the first week of 2023, the stock price has more than doubled. As of October 4, 2023, it was last traded at $73.47.
Coinbase executives have consistently expressed their intentions to diversify their services in the long term and rely on revenue sources other than trading. Nevertheless, in the short term, the company’s performance remains closely tied to the sentiment of traders. Alesia Haas, Coinbase’s Chief Financial Officer, mentioned in a recent conference,
“When volatility is low, like we see today, people just sit and hold.”
