Coinbase Q3 earnings - What to expect?

Coinbase will report its quarterly results on November 9th. The report will be for the fiscal quarter ending September 2021.

What to expect from Coinbase’s Q3 results forecast

It’s never easy to forecast Coinbases’ earnings and this quarter will be another test. For the last two trailing quarters, the reported earnings both delivered a major surprise to investors. Last quarter was a glass dropping earnings beat with a positive 157% surprise to the EPS forecast. For Q3, which is widely expected to see shrinking earnings, the consensus EPS forecast for the third quarter is $1.79, only half to its Q2 earnings per share of $3.45.

Quarterly earnings suprise amount

^{Source: Nasdaq.com}

It seems not a big surprise to market if a double-digit decline in revenue is to be disclosed from the report. A slide in both trading volume and active users is also expected on the card. Early this quarte wild volatility across the broad cryptocurrency sector is likely to weigh heavily on investor optimism and participation, based on Bloomberg’s data, market-wide cryptocurrency trading activity was down as much as 37% in the third quarter compared to the second, especially during July. Recovery has been seen towards the end of September but with a limited range to offset the loss from earlier. As a result, trading volumes is forecast to see over 30% drop from $462 billion in Q2 to $309 billion. Wall Street also expects total revenue to come in at $1.57 billion. That would represent a 548% dramatic jump from one year ago, although down from the record $2.22 billion booked in the second quarter.

Competition growth within the booming cryptocurrency community is also expected to have a squeeze on Coinbase’s MTU (Monthly Transaction Users) growth and profitability. Coinbase Global Inc (All Sessions)'s MTU base has experienced an explosive growth year. The number of MTU has turned 5.8 times from 1.5 million in Q2, 2020 to 8.8 million in Q2 this year. However, Q3 may see a pullback from this strong growth. The number of MTU is estimated to slip to 7.1million but the verified users are expected to grow from 68 million to 72 million.

^{Source: Nasdaq.com}

Coinbase share price technical analysis

Q3 may not be the best quarter for Coinbase this year due to the industry-wise trading environment. However, Crypto economy is still in its early stages, and it’s already clear that increased economic activity will take place in this new battlefield. With an aggressively growing user base and innovative product offering, this company is well positioned to seize the significant opportunities for growth and investments. The fact that its share price has entered a steep upward trajectory since the end of September and surged 35% since then has shown the level of confidence from its investors. The future prospect from the Q3 earnings and the outlook for Q4 will be a key watch for Coinbase, who needs to prove that the drop in activity during the early third quarter will not be a long-term trend.

From a technical standpoint, the momentum for Coinbase is skewed to its upward moving channel formed from the end of September when major cryptocurrencies like Bitcoin Group SE started to fly over the roof. But what also cannot be ignored is the RSI that has turned downward, and the up long tail of recent candlestick hints on a near-term pullback might be on the card before further gains.

The level at $340 is showing a decent support before the earnings report. However, if a further drop does occur, the next supporting level will be at near 20-days SMA at around $307. Looking up, immediate resistance can be seen at $348 from April 15, beyond this level there isn’t that much to go on.

Perhaps the upper band of the rising channel at around $400 would be the next exiting level to aim for.