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Coinbase (COIN) Analysts: “Q2 Wasn’t So Bad!”

Bitcoin (BTC-USD) went back to $24,000 and Ether (ETH-USD) headed toward $1,900 on today’s inflation deceleration. The consumer price index (CPI) was up +8.5% versus +9.1% last month: We’ll take it! But that’s far from the only news from the New Digital World. Let’s get into it.

An image of a person wearing a VR headset looking at a digital document
Source: Vracovska/Shutterstock

Coinbase Analysts: “Q2 Wasn’t So Bad!”

Stocks welcomed the inflation deceleration as much as crypto prices did, with the Nasdaq 100 up +2.5% on the news. (The less tech-heavy Dow and S&P 500 were up about +1.5%.)

Coinbase (NASDAQ:COIN), in comparison, rose +4%… And that’s even after last night’s earnings (and revenues) came in below expectations!

This was not well received in COIN trading after the bell – but things turned around quick this morning.

Maybe people were encouraged by analyst comments like these. While not all COIN analysts were enthused – Mizuho’s Dan Dolev suggested FTX (FTT-USD) is taking market share from Coinbase – the general vibe was: “Hey, not too bad!”

“BTIG analyst Mark Palmer repeated his Buy rating, saying the amount of the company’s cash burn didn’t set off alarm bells and fears of a massive retail investor exit didn’t materialize,” Seeking Alpha reports.

“Oppenheimer’s Owen Lau also backed up Coinbase (COIN), saying the H1 2022 crypto slump has shaken out the less than serious investors, and leaves a base of long-term believers.”

Most likely: Investors were welcoming cost-cutting measures at Coinbase. And by “cost-cutting,” I mean: “layoffs, plus cooling it on the Super Bowl type ads.”

Coinbase laid off 18% of its staff in June (as it pointed out in the investor call). Plus: “We are taking steps to streamline our operating cost structure, including recalibrating our hiring plans, optimizing our vendor spend, increasing discipline in the deployment and measurement of marketing spend, and reducing near-term capital allocated to discretionary investments,” according to the Q2 Shareholder Letter.

“We [will] focus on managing expenses closely to make sure that we can outlast any kind of down cycle. And we intentionally raised capital in 2021 to ensure that we had a really strong balance sheet going into this downturn,” as CEO Brian Armstrong further emphasized in his presentation last night.

Overall:

  • Revenues slid again in Q2, to $803 million (versus $2 billion in the year-ago quarter!)
  • Analysts – though forgiving in their responses – had expected more like $850 million revenues.
  • “Earnings” of -$4.95 per share compared to -$2.65 expected.
  • Looking ahead, Coinbase generally expects results to be “lower in Q3 compared to Q2… [then] we expect Q2 trends to continue in the second half of 2022.”
  • The cash position remained strong, at around $6 billion, up from $4.4 billion in the year-ago quarter.

NVIDIA Provides Developers with Cool New “Digital Twin” Tools

I’ve long felt that for metaverse platforms to be truly immersive – and addictive; to reach a broad audience – they need to look more realistic. Well, NVIDIA (NASDAQ:NVDA) is working on it.

Yesterday at a computer-graphics conference (SIGGRAPH), NVIDIA showed off the latest features in its Omniverse platform “to better build physically accurate digital twins and realistic avatars, and redefine how virtual worlds are created and experienced.”

For example: NVIDIA launched its Avatar Cloud Engine “to easily build and customize virtual assistants and digital humans”:

Creators can force their “3D virtual worlds to obey the laws of physics,” including realistic bodies and cloth, with NVIDIA PhysX.

Plus, there’s the Audio2Face app, where “creators can easily mix key emotions such as joy, amazement, anger and sadness.” It’s “powered by an AI model that can create facial animations based solely on voices.” Check out their (brief) cool demo video here, which even shows you the improvements over the previous offering.

Context: Decentraland (MANA-USD) held its first Metaverse Fashion Week in April. Luxury + NFTs/metaverse has mostly proven to be a match made in heaven… But fashionistas were disappointed by “average avatars in mediocre garments” in Decentraland, as “brands [had] posted the best photos from the show and not the reality of pixelated avatars and simple looks,” Cointelegraph reported. And unfortunately, Decentraland has often been a ghost town, in general.

It’s just another reason why NVIDIA software (and the high-end hardware needed to run them) will be in hot demand in metaverse economies.

NVIDIA has yet to report earnings; it’ll do so later this month. But we did get a read on Unity Software (NYSE:U) last night.

Unity’s Q2 results didn’t quite meet expectations – but not nearly to the extent of, say, Coinbase. “Earnings” of -$0.69 were off by five cents from what analysts had projected. Revenues of $297 million were $2 million below expectations.

Q3 is forecast to come in at $315 million – $335 million in revenues, said Unity, while execs did lower their full-year forecast to $1.3 billion – $1.35 billion…

But Unity did receive a $20 billion offer to be acquired by AppLovin (NASDAQ:APP), which focuses more on marketing and analytics services for apps – while Unity’s software is for “interactive, real-time 2D and 3D content.” Unity’s market cap is more like $15 billion…so the premium AppLovin is offering has been nice for U stock prices.

Reddit Will Provide Community Crypto Tokens in Partnership with Arbitrum, FTX

It’s nice to post or comment on Reddit…have a bunch of people “upvote” your wise words…and see your “karma” increase. But it’ll be much nicer – now that you’ll be able to earn Ethereum (ETH-USD) based crypto instead!

Reddit has already integrated NFTs: First, it let you use Ethereum NFTs as a profile picture. Then Reddit selected Polygon (MATIC-USD) for its avatar NFT store, as it’s an “Ethereum-compatible blockchain [with] low cost transactions and sustainability commitments.”

Now Reddit has completed a “Great Reddit Scaling Bake-Off to help figure out how to bring Community Points to the Ethereum mainnet.” And Arbitrum won the top prize.

For paying your “gas fees” to Ethereum for these Community Points, Reddit will partner with FTX. As crypto prices attempt to emerge from the bear market, it’s nice to see adoption among these widely used (and, yes, addictive) apps.

On the date of publication, Ashley Cassell did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines. To have more news from The New Digital World sent to your inbox, click here to sign up for the newsletter.


Article printed from InvestorPlace Media, https://investorplace.com/newdigitalworld/2022/08/coinbase-coin-analysts-q2-wasnt-so-bad/.

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