Why Coinbase Stock Is Lower After Earnings

The Coinbase website on a smartphone — (Image credit: Gabby Jones/Bloomberg via Getty Images)

Coinbase Global (COIN) stock dropped sharply out of the gate Friday even after the cryptocurrency exchange far surpassed top- and bottom-line expectations for its fourth quarter.

In the three months ending December 31, Coinbase's revenue increased 138.2% year over year to $2.3 billion. Its earnings per share (EPS) more than quadrupled from the year-ago period to $4.68.

"Coinbase delivered strong Q4 and full-year 2024 results," the company said in its shareholder letter. "Zooming out, the last few months have demonstrated a sea change in the regulatory environment, unlocking new opportunities for Coinbase and the crypto industry."

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The results trounced analysts' expectations. Wall Street was anticipating revenue of $1.9 billion and earnings of $1.81 per share, according to CNBC.

Coinbase also said trading volume nearly tripled year over year to $439 billion, thanks to a 224% increase in consumer trading volume to $94 billion and a 176% surge in institutional trading volume to $345 billion.

"Crypto's voice was heard loud and clear in the U.S. elections, and the era of regulation via enforcement that crippled our industry in the U.S. is on its way out," Coinbase added. "The Trump administration is moving fast to fulfill its promise of making the U.S. the crypto capital of the planet, and globally, leaders are taking notice and increasing their attention and investment into crypto."

Is Coinbase stock a buy, sell or hold?

Heading into Friday's session, Coinbase Global shares had doubled on a year-over-year basis, so the post-earnings pullback could be a result of investors taking some profits. Still, Wall Street thinks the financial stock has more room to run.

According to S&P Global Market Intelligence, the average analyst target price for COIN is $320.71, representing implied upside of nearly 15% to current levels. Additionally, the consensus recommendation is a Buy.

Financial services firm Needham is one of those with a Buy rating on the large-cap stock alongside a $330 price target.

"We view Coinbase as an attractive way to play the growing crypto asset universe, which includes overlap in the high-growth areas of stablecoins, decentralized finance (DeFi), non-fungible tokens (NFTs), exchanges in spot/derivatives, and blockchains (Base)," says Needham analyst John Todaro.

Over the long term, Todaro expects the company to "broaden its applications to include a variety of crypto-related financial services activities," while near-term growth will come from "its staking offering as more crypto networks move to a proof-of-stake consensus algorithm and its stablecoin interest account offerings."

Joey Solitro is a freelance financial journalist at Kiplinger with more than a decade of experience. A longtime equity analyst, Joey has covered a range of industries for media outlets including The Motley Fool, Seeking Alpha, Market Realist, and TipRanks. Joey holds a bachelor's degree in business administration.