Coinbase stock price is rising; Aug. 1 will be crucial

Coinbase stock price rose almost 5% in the pre-market session as Bitcoin and other altcoins bounced back.

The stock was trading at $242, up 15% from this month’s low of $210. Other crypto-related stocks, such as Marathon Digital, Riot Platforms, MicroStrategy, and Core Scientific, rose by over 4%. 

Cryptocurrencies are bouncing back

The recovery happened as Bitcoin (BTC) rose by 4%, reaching an intraday high of $67,240. Other top gainers were cryptocurrencies like SATS, Aave (AAVE), and Mog Coin (MOG). In most cases, Coinbase and other stocks in the industry rise when cryptocurrencies are recovering.

Still, despite its rebound, Coinbase stock remains in a technical correction, having dropped by over 15% from its highest level this year. 

Also, this recovery is happening in a low-volume environment. Data shows that the 24-hour volume in centralized and decentralized exchanges dropped by 5.4% to $80.6 billion. 

Coinbase earnings ahead

The next important catalyst for Coinbase stock will be the company’s quarterly results on Aug. 1. 

According to Yahoo Finance, the average estimate among 17 analysts is that the company made $1.41 billion in the second quarter. The highest estimate is $1.73 billion while the lowest one is $1.23 billion. 

If the average estimate is correct, it will represent a 98% year-on-year growth rate and a drop from the $1.64 billion it made in the first quarter. The drop will happen because cryptocurrencies were muted in the second quarter after soaring in Q1.

Data by DefiLlama shows that the volume in the DEX market peaked at $288 billion in March and has dropped to $157 billion this month. Centralized Exchanges (CEX) have also seen a similar drop in volume.

Wall Street analysts also expect that its forward guidance will point to an annual revenue of $5.94 billion, a 91% increase from the same period in 2023. 

The bullish case for Coinbase stock

Most analysts have a buy or neutral rating on Coinbase stock. The average COIN stock target is $267, up from the current $231. In a recent note, crypto.news pointed to an analyst who predicted that the shares would jump to $1,700 in the long term. Citigroup upgraded the stock from neutral to buy this week.

Bulls note that Coinbase is the biggest crypto exchange in the United States, is audited by Deloitte, and is under the supervision of the Securities and Exchange Commission since it is a publicly traded company. 

Additionally, Coinbase has diversified its business and is making money from different sources. For example, it has become the biggest custodian of Bitcoin and Ethereum (ETH) ETFs. It is also one of the biggest Bitcoin holders in corporate America with 9,480 coins.

However, shorts believe that the company is highly overvalued. It has a market cap of over $60 billion, annual revenues of $2.92 billion, and a forward price-to-sales ratio of 34. The industry has also become highly competitive, and Coinbase has lost market share to Bybit. 

Therefore, Aug. 1 will be important as its earnings will provide investors with more details about its operations, especially its ETF custody business.