Coinbase Global, Inc. (COIN): What's the Buzz About?

Coinbase Global, Inc. (COIN) has become a focal point for investors, with many keeping a close eye on its stock performance. Given the recent uptick in investor interest, it's worth delving into the factors that may affect the company's stock trajectory in the near future.

In the span of the last month, Coinbase's stock has seen a significant increase of 28.5%, outpacing the S&P 500 composite's rise of 7.6%. This was in tandem with the broader Securities and Exchanges industry to which Coinbase belongs, which saw a 7.1% gain. These trends bring us to ponder the potential future direction for Coinbase's stock.

Shifts in a company's stock can often be linked to media releases or rumors that indicate considerable changes in its business prospects. Ultimately, however, the underlying financials—led by revisions to earnings estimates—tend to drive long-term investment decisions.

Revisions to Earnings Estimates

At the core of stock valuation, the trajectory of a company's earnings estimates plays a crucial role. Experts consider the revisions of these estimates as a strong indicator, as they mirror the impact of the latest business trends and contribute to determining the fair value of a stock. When analysts raise their earnings estimates for a company, the fair value for its stock generally follows suit, sparking investor interest and potentially leading to price appreciation. This correlation between earnings estimate revisions and stock movements has been backed by research.

Currently, for the upcoming quarter, Coinbase is projected to post a loss of $0.22 per share, an improvement of 91.1% over the same quarter last year. Over the past 30 days, this loss estimate has been revised upwards by 53.9%. The consensus estimate for the current year is a loss of $0.98 per share, which would signify a year-over-year improvement of 91.7%, with a revision upwards by 60.9% in the last 30 days. Looking ahead to the next fiscal year, the consensus estimate sits at a loss of $0.70 per share, shifting 29.3% from what the company reported a year prior, albeit this estimate has seen a downward revision of 56.8% over the past month.

Revenue Growth Projections

The potential growth in revenue is another vital indicator of a company's financial health, as sustainable earnings growth is generally supported by corresponding revenue increases. For this quarter, the consensus sales estimate for Coinbase is $687.75 million, marking a 9.3% increase year-over-year. The company's revenue forecasts for the current and next fiscal years stand at $2.84 billion and $2.99 billion, reflecting changes of -11% and +5.3%, respectively.

Past Performance and Valuation

Last quarter, Coinbase reported a revenue of $674.15 million, up 14.2% from the same quarter in the previous year, and an EPS of -$0.01, a significant improvement from -$2.43 a year prior. The company has consistently beaten consensus EPS estimates three times out of the last four quarters, while also surpassing revenue estimates in each of those quarters.

Valuation is a cornerstone of any investment decision. Comparing the company's current valuation multiples with historical values and those of its peers can help gauge whether the stock is overvalued, undervalued, or fairly priced. Currently, Coinbase's valuation suggests it's trading at a premium compared to its industry peers.

Looking Forward

The information provided above, along with additional data, serves to help investors decide whether the buzz around Coinbase is justified. The company's Zacks Rank #2 (Buy) indicates that it may perform well in the near term compared to the broader market.

Coinbase, Stocks, Investing