Dan Dolev Predicts that Coinbase Will Miss Q3 Revenue Estimates by 10%
In a recent analysis, Mizuho analyst Dan Dolev forecasted that Coinbase, the popular cryptocurrency exchange, will fall short of its Q3 revenue estimates by around 10%. This prediction comes as Coinbase shares are already down approximately 35% from their year-to-date high.
Dan Dolev’s View on Coinbase
Dolev shared his perspective on Coinbase’s revenue outlook for the third quarter, stating that “we expect dwindling volumes combined with an expected drought in retail trading to meaningfully weigh on 3Q revenue.” He believes that the declining trading volumes and reduced retail trading activity will have a significant impact on Coinbase’s revenue for the quarter.
It’s worth noting that the volatility of Bitcoin trading has decreased to levels not seen in over four years, further contributing to the potential decline in Coinbase’s revenue.
Based on these factors, Dolev predicts that Coinbase will fall approximately 10% short of the consensus estimate for Q3 revenue.
Coinbase’s Downside Potential
In addition to his revenue forecast, Dolev also believes that Coinbase shares have significant downside potential. He forecasts that the cryptocurrency exchange will report revenue between $609 million to $652 million for the third quarter. This forecast takes into account a sharp decline in Coinbase’s average daily trading volume, which dropped from around $1.0 billion in Q2 to $665 million in September.
As a result, Dolev maintains his “underweight” rating on Coinbase shares and sets a price target of $27, indicating a more than 60% downside from the current price.
Dolev’s bearish outlook on Coinbase comes shortly after the exchange announced that it had obtained Anti-Money Laundering registration with the Bank of Spain. Coinbase is recognized as the largest holder of Bitcoin globally, according to Arkham.
Overall, it appears that Coinbase may face some challenges in meeting its revenue expectations for the third quarter, and investors should be mindful of the potential downside in its stock.
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