Coinbase Global, Inc (NASDAQ:COIN) is set to print its fiscal second-quarter financial results after the market closes on Tuesday. The stock was trading over 10% lower heading into the event.
When the cryptocurrency trading platform printed its first-quarter results on May 10, the stock gapped down over 24% the following day and on May 12, Coinbase dropped to a 52-week low of $40.83 before bouncing up off the level.
For the first quarter, Coinbase reported a loss of $1.98 per share, which missed the consensus estimate for EPS of 17 cents. The company’s revenues declined $635 million from the same period the year prior.
For the second quarter, analysts estimate Coinbase will print earnings per share of $2.68 on revenues of $830.52 million.
A bearish crypto market has likely affected Coinbase during the second quarter because bearish markets often lead to lower trading volume and fewer transactions. Bitcoin (CRYPTO: BTC) and Ethereum (CRYPTO: ETH) both reached their 52-week lows toward the end of the second quarter, reversing course to the upside on June 18. Bitcoin plunged over 56% during the second quarter, and Ethereum plummeted a total of 67% over the same time period.
On Friday morning, Citigroup analyst Peter Christiansen maintained a Buy rating on Coinbase and lowered the price target from $115 to $105. The new price target suggests about 20% upside for the stock.
From a technical analysis perspective, Coinbase’s stock looks neutral heading into earnings, and it should be noted that holding stocks or options over an earnings print is akin to gambling because stocks can react bullishly to an earnings miss and bearishly to an earnings beat.
Options traders, particularly those who are holding close dated calls or puts, take on extra risk because the institutions writing the options increase premiums to account for implied volatility.
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The Coinbase Chart: Coinbase negated its uptrend on Monday, when the stock printed a lower high at the $103.55 level, which came in under the most recent higher high of $116.30 that was printed on Aug. 4. Coinbase hasn’t yet printed a lower low to confirm a downtrend is intact, but if the stock suffers a bearish reaction to its earnings print, a downtrend will be on the horizon.
- There’s a chance Coinbase has settled into a bull flag pattern on the daily chart, with the pole formed between Aug. 2 and Aug. 4 and the flag forming over the days that have followed. If Coinbase receives a bullish reaction to its earnings and the bull flag pattern plays out, the measured move is about 91%, which suggests Coinbase could trade up toward $165 in the future.
- Bullish traders will want to see Coinbase hold above the eight-day exponential moving average following its earnings, or the bull flag will be negated. Bearish traders want to see the stock lose support at the 50-day simple moving average, which will indicate longer-term sentiment has turned bearish.
- Coinbase has resistance above at $112.14 and $129.29 and support below at $83.83 and $60.99.