Most investors avoid investing in stocks during – and after – their earnings results, and for good reason. Volatility is usually at its peak around those days as the market adjusts and digests the financial implications on a company’s stock and its valuation moving forward. However, with the first quarter of 2025 earnings season in full swing, some opportunities cannot be missed.
For example, the recent price action in Coinbase Global (NASDAQ:COIN) saw a spike right after the earnings were released, only to see the stock come down by as much as 7.1% at the opening the next morning. With this in mind, investors now need to dig deeper into the implications of this wild swing and whether the downside is justified moving forward.
Of course, beyond the fundamentals and key performance indicators (KPIs) in Coinbase, investors need to keep in mind that the price action in Bitcoin and other cryptocurrencies are also a major factor that influences most of the movements in Coinbase stock on any given day. Knowing this, there could be a potential buying opportunity due to this divergence between Coinbase and Bitcoin after the recent earnings.
Coinbase is Firing on All Cylinders
Looking at the most common financial performance metrics, such as revenue and operating earnings, it becomes clear that Coinbase is firing on all cylinders. Its 7% decline after earnings isn’t really justified today. What investors can blame this on, however, is the possibility that the stock had already priced in this financial growth.
This is why looking at the $250 price level on the chart could be beneficial for a potential entry since it has acted as support in the past and would significantly reduce the valuation of the company to a level where today’s (and tomorrow’s) growth won’t be nearly as priced in as it is today.
Back to financials, Coinbase reported up to $2.3 billion in total revenue for the fourth quarter of 2024, which translated to a net growth of 88% over the past quarter alone. Transaction revenue followed with a respective $1.6 billion, or 172% jump over the previous quarter as well.
Driving these jumps is the fact that the Coinbase app, according to the Apple (NASDAQ:AAPL) App Store, went from being the nineteenth-most downloaded financial app six months ago to the seventh-most downloaded app as of February 2025. This means that millions and millions of people signed up for a Coinbase account during this period.
Why? Bitcoin’s bullish price action could be the culprit. As more retail investors got excited about the cryptocurrency market and the fear of missing out (FOMO) kicked in, they saw Coinbase as the most reliable solution to trading Bitcoin and other cryptocurrencies.
With this in mind, investors can point to the impressive growth in some of Coinbase’s balance sheet items, such as dollar resources in custody. These items grew to $9.3 billion worth of cash in the fourth quarter of 2024, up $1.1 billion from the previous quarter, a testament to the vast number of new accounts and deposits from willing Bitcoin and cryptocurrency buyers during this period.
The Market’s Take on Coinbase Stock Moving Forward
Here’s why investors should remain excited about Coinbase and its future, but only at the right entry of $250 per share. Some Wall Street analysts are just as bullish (if not more) today on Coinbase as ever.
Particularly those from JMP Securities, who decided to reiterate their market outperform rating on Coinbase the morning after the company’s earnings announcement, and this time placing a $475 price target on the stock as well. This new view would call for Coinbase to make a new 52-week high and imply a net 72.2% upside from today’s prices.
There is also a reason why the broader market is willing to pay up to 50.9x in a price-to-earnings ratio (P/E) for Coinbase stock, which is a steep premium compared to the rest of its financial sector peers. The sector’s average today stands at 22.5x P/E, so some investors might call Coinbase expensive.
However, seasoned professionals would remind them that the market is always willing to pay a premium for the stocks it believes will outperform its peers and industry, as well as the market itself. Considering Coinbase’s double-digit growth rates across the board, this premium seems justified today.