Coinbase Likely to Top Q3 Trading, Revenue Estimates on Bitcoin Volatility: Oppenheimer

There is an 18% potential upside to trading volume and an 11% upside to total revenue estimates, an analyst wrote Tuesday night.

Coinbase (Nasdaq: COIN) is likely to top consensus estimates for trading volume and total revenue for the third quarter due to recent volatility in the price of bitcoin, according to Oppenheimer analyst Owen Lau.

• Lau estimates there is an 18% potential upside to trading volume and an 11% upside to total revenue estimates, citing the exchange’s “substantially” improved trading volume in the second half of the third quarter.

• Coinbase shares had a “rough” September with the stock down 12.2% versus the S&P 500′s 4.8% dip – likely hurt by increased regulatory scrutiny, the retreat of bitcoin, the company’s move to preemptively end its Lend product, its $2 billion debt raise and macro risks associated with Evergrande in China.

• “With all the news driving volatility, trading volume has substantially improved in late August and September,” Lau wrote in a note.

• Lau, who has an outperform rating on the shares and a $444 price target, estimates that Coinbase has $6.5 billion in cash as of the third quarter that can be potentially used for new product development, M&A, diversification and increased balance sheet investment in crypto.

• Late last month, JMP Securities was also bullish on Coinbase shares, putting a $300 price target and market outperform rating on the shares.

• COIN shares are currently trading at around $250.