Coinbase Global (COIN) Earnings: Q2 earnings even worse than expected

UPDATE: Coinbase Global's Q2 earnings were even worse than expected – much worse, in fact. The crypto platform offered up GAAP EPS of $-4.98, which was nearly double the expected $-2.77. Revenue also came in even lighter than expected. Revenue of $808 million was an astounding 64% reduction from the period last year. Consensus for the quarter was already a sharp drop off at $868 million, but Coinbase could not even meet this lowered threshold. Monthly active users in the second quarter came in at 9 million, which was above the 8.8 million from Q2 2021 but below the first quarter's 9.2 million figure.

• Coinbase Global will unveil Q2 earnings after Tuesday's market close.
• Wall Street expects adjusted EPS of $-1.23 on revenue of $868 million.
• COIN stock has rallied 78% in the past month.

The question for Coinbase (COIN) as the market awaits the second quarter earnings release after Tuesday's close is not whether earnings will be poor. They assuredly will be. The question is how bad can the earnings get. Wall Street's current projections are all over the place due to the heavy amount of churn and reduced crypto prices seen during the second quarter. Consensus calls for adjusted earnings per share (EPS) of $-1.23, GAAP EPS of $-2.77, and revenue of $868.4 million.

Also read: Tesla Stock Deep Dive: Price target at $400 on China headwinds, margin compression, lower deliveries

Coinbase Global earnings

This quarter's projections compared to adjusted EPS of $6.78 and revenue of $2.23 billion in the second quarter of 2021, so you can see just how vulnerable Coinbase is to gyrations in the crypto market. No one said it was going to be a boring company to invest in when it IPO'd in April 2021, but few also expected this much upheaval. The consensus sales figure of $868 million is a 61% reduction compared to the year-ago quarter.

COIN stock is down more than 66% since the IPO, while its biggest product Bitcoin (BTC) has fallen 64% since then. COIN stock has a tendency to rely heavily on the outperformance of the overall crypto market. Still, COIN stock is up some 78% in the past month after Bitcoin price has appeared to find a floor of support in the low $20,000s. Just last week BlackRock announced a partnership with Coinbase to give institutional clients access to crypto. Of course, as institutional clients, Coinbase's margins would have to be reduced.

Coinbase Global has missed three of five quarterly revenue forecast averages since going public and two of five EPS forecasts.

Last Friday Citigroup's Peter Christiansen retained his Buy rating on COIN but cut the price target from $115 to $105. That is about the average with the most up-to-date data showing consensus at $108 and change. Goldman Sachs has a Sell rating and a $45 price target. Mizuho's Dan Dolev has the lowest price target at $42. The highest price target was given by BTIG's Mark Palmer at $290, although it is way down from his prior $380 target.

The Securities & Exchange Commission (SEC) has been looking into several coins listed on the Coinbase platform that it considers securities. Cathie Wood's Ark Invest funds sold off 1.41 million shares due to the regulatory uncertainty caused by the news but still owns over 7 million shares of COIN.

Coinbase Global forecast

First, it is important to protect your downside in the case of a major miss or even worse guidance. In early August, COIN stock demonstrated its use of the 50-day moving average as support. It is now at $63, but before that, there is further support at $74. Recent resistance near $80 may also supply support, but none of these levels are close to its recent settlement just above $98. This is to say there is little nearby support in the case of a severe sell-off.

On the upside, resistance sits at $130 from early May. Above there is a supply zone between $152 and $162 stemming from April. This is yet another sign that there are few nearby support or resistance points to cling one's hopes. At its current price near $98, COIN only has the $100 psychological level and the 100-day moving average, currently at $98.34.

COIN daily chart