Coinbase Stock Crashes 5% After Earnings: Is it Safe to Buy the Dip?

Key Insights

• Coinbase stock dropped by over 5% after the company published its financial results.
• Its revenue dropped by 21%, while its loss surged to over $300 million.
• The stock is at risk of a steep bearish breakdown in the near term.

Coinbase stock price crashed by nearly 5% in extended hours as the company published a weak financial report. COIN dropped to $183 after ending the regular session at $192.9. So, is it safe to buy the dip?

Coinbase Stock Dived After Earnings Report

COIN’s share price has slumped since July last year, when it peaked at the record high of $445. This crash accelerated during the ongoing crypto winter that has pushed most coins in a technical bear market.

The company published a relatively weak financial report on Thursday, with the main highlight being its huge loss. It lost over $394 million in the last quarter, after losing $666 million in the previous one.

Coinbase’s report showed that its revenue plunged by 21% YoY in the last quarter as the volume of cryptocurrencies traded on its platform falling sharply. As a result, its transaction revenue dropped 40% YoY, while subscription revenue fell 14%.

The earnings report had some positives

Still, despite the weakness, the company had some positives. For example, it continues to grow its stablecoin business, which is powered by its partnership with Circle. It now holds about 25% of USDC in circulation, a move that helps it earn high-margin revenue.

The company is also aiming to become the biggest player in agentic commerce, which will be powered by the USDC token. On Thursday, the company said that Amazon had integrated its x402 payments protocol.

At the same time, Coinbase’s entry into the prediction market industry is starting to pay off, with its annualized revenue crossing $100 million just a few months after launch.

Its efforts to become an exchange for everything will help it to become a more profitable company over time as it will not rely substantially on the crypto industry.

At the same time, the company may start to benefit from the ongoing crypto market recovery that has pushed the Bitcoin price to $80,000. This recovery may drive greater demand for coins, in turn boosting transaction volume.

Also, it has already started to benefit from the ongoing ETF inflows. While spot Bitcoin ETFs shed $277 million on Thursday, they remain substantially strong this month.

The funds have now added $1.4 billion this month and are in the third consecutive month in the green. This is important for Coinbase, as it is the industry’s largest custodian, holding assets for companies like BlackRock and Grayscale. Its custody business will likely continue now that it has received a national bank charter.

Coinbase also continues to return funds to investors through its share buyback policy. It has bought millions of shares over the past few months, helping it offset the substantial dilution caused by stock-based compensation.

Coinbase share buybacks | Source: Coinbase

These buybacks are supported by its strong balance sheet, which has over $10 billion in cash, which is equivalent to 20% of its market capitalization. Coinbase also announced a 14% reduction in workers this week, a move intended to make it more profitable.

Coinbase Stock Price Technical Analysis

Technical analysis suggests that the COIN stock price may be at risk of more downside in the near term. It has formed a bearish pennant per, which is made up of a steep decline and a symmetrical triangle pattern. The two lines of the triangle pattern are nearing their convergence, meaning that a crash is about to happen.

The stock also formed a death cross, as its 50-day and 200-day moving averages crossed. This cross appeared on the three-day chart, indicating its severity.

COIN stock chart | Source: TradingView

Therefore, the COIN stock price may crash soon, potentially to the important support level at $145, its lowest level in February this year and April last year. It was also the lowest point in September 2024.

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