Coinbase Expected to Move Another 10% After This Week’s Earnings Report
Coinbase Expected to Move Another 10% After This Week’s Earnings Report
By:Mike Butler
The company’s stock has already rallied 13.5%, and a halving of Bitcoin is slated for April
- Coinbase stock is up almost $20 on Valentine's Day, ahead of the company’s Q4 ’23 earnings call on Feb. 15 at 3:15 p.m. CDT after the market closes.
- It is expected to report earnings-per-share (EPS) of $0.27 on $820 million in revenue.
- The popular crypto exchange has exceed EPS and revenue expectations three quarters in a row.
- After posting an EPS loss of ($0.01) last quarter on an expected loss of ($0.54), Coinbase is now expected to post a positive EPS for last quarter.
Coinbase Earnings Preview
The cryptocurrency hype has been real so far in 2024. Bitcoin exchange-traded funds (ETFs) were finally approved, and there will be another Bitcoin halving in April. Bitcoin is surging to levels we haven't seen since 2021, blasting through $50,000 on Feb. 14.
Coinbase (COIN) stock opened the year at $173.02 and dropped as low as $114.51 this month before gaining momentum to the upside. Ahead of its earnings call on Feb. 15, Coinbase stock sits at around $157.
There aren’t many other ways to say it: Coinbase stock has a massive expected stock price move for the earnings call on Thursday after the close. Anyone remotely interested in cryptocurrency will be watching.
Based on current implied volatility, the options market is pricing in a +-$16.72 stock price move for just this week. Compare that to the expected move through the March options cycle, which sits at +-$31.27, and we can see that over half of the expected move for the next few months is priced into this earnings announcement.
Bullish on Coinbase for earnings
With so much attention on Coinbase, it will be interesting to see how the market digests what the company has to say during its earnings conference call. More importantly, if the crypto exchange can post a positive EPS figure, it may change the way traders and investors see the exchange going forward.
With such a sharp rise in the price of Bitcoin, along with an increase in trading volume, many analysts expect a massive increase in Coinbase trading volume from the third quarter, which can only help the journey from a negative to positive EPS.
If Coinbase can post strong Q4'23 figures, and paint a bullish picture for the rest of 2024 with the Bitcoin ETFs approved and the Bitcoin halving looming, we may see the stock price soar even higher.
Bearish on Coinbase for earnings
Recently, JP Morgan (JPM) downgraded Coinbase stock, stating that flows into Bitcoin ETFs were underwhelming relative to public perception. Negative press isn't great for fringe investors and traders who may be scared off from any negative sentiment, especially when it comes to a high volatility product like COIN stock.
With Bitcoin ETFs coming to the surface as a low-cost alternative to trading Bitcoin on Coinbase, we may see pressure from the crypto exchange to reduce trading fees, which would hurt the bottom line long-term.
Any sort of earnings miss or negative sentiment from the earnings call could result in a bearish move in the stock price.
Join us on Options Trading Concepts Live on Thursday, Feb. 15 at 11 a.m. CDT ahead of the earnings announcement for a deep dive into options trading strategies!
Mike Butler, tastylive director of market intelligence, has been in the markets and trading for a decade. He appears on Options Trading Concepts Live, airing Monday-Friday. @tradermikeyb
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