As bitcoin, ethereum and other cryptocurrencies get increasing attention from investors, Wall Street and its traditional banks continue to adjust to the shift. Catch up on this week's top stories highlighting the intersection of these old guard and new school areas of finance with this recap compiled by The Fly.
COINBASE REPORTS Q2 EARNINGS: On Tuesday, Coinbase (COIN) reported second quarter loss per share of $4.98 on revenue of $808.3M, which compared to analyst consensus of loss per share of $2.65 on revenue of $832.23M. Coinbase said in its letter to investors: "The decline in crypto asset prices significantly impacted our Q2 financial results, which were consistent with the outlook provided in May…Soft crypto market conditions from Q2 are continuing into Q3 and are reflected in our Q3 outlook. July MTUs declined to 8.0 million. Accordingly, we expect MTUs to be lower in Q3 compared to Q2 and for a higher portion of MTUs to be non-investing users compared to investing users compared to Q2.”
In addition, in a regulatory filing related to its quarterly report, Coinbase stated: "The company has received investigative subpoenas and requests from the SEC for documents and information about certain customer programs, operations, and existing and intended future products, including the company's processes for listing assets, the classification of certain listed assets, its staking programs, and its stablecoin and yield-generating products. Based on the ongoing nature of these matters, the outcomes remain uncertain and the company cannot estimate the potential impact, if any, on its business or financial statements at this time.”
Following the report, Keefe Bruyette analyst Kyle Voigt downgraded Coinbase to Underperform from Market Perform with an unchanged price target of $45. The analyst reduced revenue and adjusted EBITDA estimates on the "weak" volume trends into Q3 and the company's mix-shift towards lower-fee institutional trading. He downgrades Coinbase on valuation following the recent surge in the shares. Piper Sandler analyst Richard Repetto lowered the firm's price target on Coinbase to $115 from $120 and kept an Overweight rating on the shares. The analyst said the company's wins at BlackRock and Meta support his long term thesis of Coinbase's "dominant positioning in the crypto world." Meanwhile, JMP Securities analyst Devin Ryan lowered the firm's price target on Coinbase to $195 from $205 but kept an Outperform rating on the shares. While the company's engagement remains "slow" to start Q3 however, the analyst believes that Coinbase remains incredibly well positioned to benefit as the "pendulum" of asset prices moves back into the middle. Ryan added that as retail investors reengage, liquidity will improve and active participants will need to seek pockets of the greatest liquidity, where Coinbase will be positioned. Additionally, JPMorgan analyst Kenneth Worthington raised the firm's price target on Coinbase to $64 from $61 and kept a Neutral rating on the shares. The company's Q2 was a challenging quarter but there were some positives, Worthington said. Verified users grew and Coinbase managed down core expenses from Q1 levels, said the analyst.
BLACKROCK LAUNCHES SPOT BITCOIN PRIVATE TRUST: BlackRock (BLK) said in a Thursday blog post that it has launched a spot bitcoin private trust. The trust is available to U.S. institutional clients and seeks to track the performance of bitcoin, less expenses and liabilities of the trust. "Despite the steep downturn in the digital asset market, we are still seeing substantial interest from some institutional clients in how to efficiently and cost-effectively access these assets using our technology and product capabilities," the company said.
MARATHON REPORTS Q2 RESULTS: Marathon Digital (MARA) reported Q2 loss per share of $1.75 on revenue of $24.92M on Monday, which compared to analyst estimates of loss per share of 22c on revenue of $37.57M. "In the second quarter of 2022, we increased our bitcoin production 8% year-over-year, producing 707 bitcoin, and we continued to install miners in Texas in anticipation of energization as we worked through both operational obstacles and a challenging macro environment," said Fred Thiel Marathon's chairman and CEO. "Energization delays, maintenance and weather issues in Montana, and an approximately 56% decline in the price of bitcoin during the quarter, severely impacted our bitcoin production and financial results. These items reduced our revenues, caused us to record a $127.6M impairment on our bitcoin holdings, and decreased the fair market value of our investment fund by $79.7M. However, given the groundwork we laid during the quarter and the progress we have made since, we are optimistic that Marathon's operational and financial positioning is improving."
Following the report, B. Riley analyst Lucas Pipes raised the firm's price target on Marathon Digital to $10 from $8 and kept a Neutral rating on the shares. The miss was primarily due to higher energy and hosting costs as well as higher overhead, Pipes said. Additionally, Jefferies analyst Jonathan Petersen lowered the firm's price target on Marathon Digital to $24 from $25 and kept a Buy rating on the shares. Marathon mined 707 new bitcoin in Q2, up 8% year-over-year and down 44% quarter-over quarter, with the quarterly decrease due primarily to downtime at the Hardin mining facility, Peterson said. Management indicated that Marathon may begin selling a portion of self-mined bitcoin to cover expenses, the analyst noted.
CLEANSPARK REPORTS Q3 FINANCIALS: CleanSpark (CLSK) announced Tuesday Q3 continuing operations loss per share of 39c on a revenue of $31M, which compared to analyst views of a loss per share of 10c on a revenue of $36M. "CleanSpark continued to grow by mining a record number of bitcoin and substantially increasing our hashrate," said Zach Bradford, CEO. "We are optimizing uptime and maximizing profits with our wholly owned locations. We have also made efficient use of our capital by putting new miner purchases to work quickly. Despite macroeconomic headwinds, our results demonstrate the resiliency of our strategy, and we expect to grow in what is otherwise a bear market."
Following the news, H.C. Wainwright analyst Mike Colonnese raised the firm's price target on CleanSpark to $12 from $6 and kept a Buy rating on the shares. The company is showing strong execution continues despite the tough macro backdrop for miners, Colonnese said.
CleanSpark also announced Tuesday it has entered into a definitive agreement to acquire an active bitcoin mining facility located in Washington, Georgia, for $16.2M. The company has also purchased approximately 3,400 of the latest generation Antminer S19 series of machines for approximately $8.9M. These machines, already operating at the acquired site, will add over 340 petahashes per second of computing power. The Company will fill the balance of the 36 MW with machines already paid for and on hand. The site has exclusive rights to an additional 50 MW of power, making the site scalable to 86 MW.
GALAXY DIGITAL PRICE TARGET LOWERED: BTIG analyst Mark Palmer lowered the firm's price target on Galaxy Digital Holdings (BRPHF) on Monday to C$28 from C$37 and kept a Buy rating on the shares post the Q2 results. The print helped to answer some questions that had lingered over the stock in the aftermath of the collapse of some large crypto lending platforms and the steep declines of crypto and risk asset prices during the quarter, Palmer said. The analyst said the size of the losses that Galaxy posted during Q2 "were not nearly as severe as some had feared."
CRYPTO STOCK PLAYS: Cryptocurrency revenues have been pointed to as reasons to be bullish on Advanced Micro Devices (AMD) and Nvidia (NVDA) in select research. Ideanomics (IDEX), Riot Blockchain (RIOT), Overstock (OSTK), Pareteum (TEUM) and SRAX (SRAX) are other stocks that have been touted, or promoted themselves, as a way to play the crypto theme.
PRICE ACTION: As of time of writing, bitcoin rose about 4% this week to $23,837 in U.S. dollars, according to TradeBlock.
