In this video I will be going over Coinbase's (COIN -0.34%) Q2 earnings report as well as some risks everyone needs to be aware of. You can find the video below.
Earnings highlights
Coinbase reported earnings per share of $6.42, beating expectations of $2.57, and revenue of $2.23 billion, beating expectations of $1.83 billion. Net income was $1.6 billion and adjusted EBITDA was $1.1 billion. The company said it now has over 9,000 financial institutions using Coinbase, and retail monthly transacting users (MTUs) stood at 8.8 million, up 44% quarter over quarter, while "verified users" on the platform were 68 million.
As for guidance, Coinbase expects retail MTUs and total trading volume to be lower in Q3 because of the uncertainty in the market, and volatility might go down as more people go on vacation and trade less. For the full year, the company envisioned three possible scenarios: high (average MTUs of 8.0 million), mid (average MTUs of 7.0 million), and low (average MTUs of 5.5 million).
Risks
The biggest risk to Coinbase is that cryptocurrencies may fail to go mainstream. So if you don't believe in a crypto future, Coinbase should not be a stock to consider. In the short term, market volatility will play a big role in how Coinbase performs. With high volatility, Coinbase will do very well (bull or bear market). With low volatility, it won't do well. But as this industry evolves and more and more institutions take part in it, Coinbase's revenue sources will depend less on transactional fees. Two months ago I mentioned a couple of reasons why Coinbase is a great company to hold in your long-term portfolio.
For the full insights watch the video below.
*Stock prices used were the closing prices of August 11, 2021. The video was published on August 12, 2021.
