Coinbase Global Inc. saw improving cryptocurrency trends in January after a dismal end to the year, but Wall Street is focused on the long term.
Specifically, in the wake of Coinbase’s COIN fourth-quarter report, analysts are curious about the company’s target for positive adjusted earnings before interest, taxes, depreciation and amortization regardless of market conditions. Coinbase has conducted two rounds of substantial job cuts and tweaked its compensation policies as well in pursuit of expense discipline.
There are also regulatory issues dogging Coinbase. With a recent crackdown by the Securities and Exchange Commission on other crypto players, some analysts are concerned about whether aspects of Coinbase’s business will face pressure.DA Davidson analyst Christopher Brendler saw a better profit story coming out of the latest quarter, though he maintained a neutral rating on the stock amid regulatory concerns.
“As most crypto assets declined in value with increasing interest rates, USDC outstanding supply remained relatively stable in a higher rate environment,” he wrote. “As such, it is not unreasonable to expect USDC supply to stay flat or even modestly grow in a rising interest rate environment, which means this business could act as a growing buffer to trading volumes.”
Not everyone was sold on the company’s aims, with Jefferies analyst Trevor Williams writing that he saw a “murky path back to profitability” for the company.
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