Coinbase Q1 Earnings, Deribit Acquisition Draws Mixed Response From Wall Street

Wall Street gave a mixed response to Coinbase stock after the company reported its first-quarter earnings and announced the acquisition of crypto derivatives exchange Deribit.

JPMorgan lowered its price target on Coinbase to $215 from $276 and kept a ‘Neutral’ rating on the shares, as per TheFly.

The firm noted that a more challenging environment "plagued" the company's first-quarter (Q1) results, with the second quarter (Q2) starting slowly. JPMorgan also believes the more challenging transaction environment takes a "big chunk" of the company’s forward earnings projections.

Coinbase’s Q1 revenue rose to $2.03 billion from $1.64 billion in the same quarter a year ago but fell short of a Wall Street estimate of $2.08 billion. Adjusted earnings per share (EPS) stood at $1.94, marginally higher than an estimated $1.93.

At the same time, the company said it would acquire crypto derivatives exchange Deribit for approximately $2.9 billion in a cash and stock deal. The transaction cost comprises $700 million in cash and 11 million shares of Coinbase Class A common stock.

Coinbase said the acquisition significantly advances its derivatives business, as Deribit complements Coinbase’s rapidly growing U.S. futures and international perpetual futures businesses.

H.C. Wainwright, which lowered its price target on Coinbase to $305 from $350 and kept a ‘Buy’ rating on the shares, views the transaction "as compelling for several reasons.” The firm expects continued volatility in the short term due to trade wars and macro uncertainty, but believes the "stars are aligning for an extended bull market for crypto" over the next 12 to 18 months.

At the same time, Piper Sandler raised the firm's price target on Coinbase to $190 from $180 and kept a ‘Neutral’ rating on the shares. As per TheFly, while Piper believes the Deribit deal has the potential to significantly expand Coinbase's derivatives business and global presence, it noted that Deribit currently does not offer any derivative products that are regulatory compliant in the U.S.

Keefe Bruyette also raised its price target on Coinbase to $205 from $183 and kept a ‘Market Perform’ rating on the shares.

Coinbase stock fell over 3% on Friday. The shares have declined by over 22% this year and 5% in the past 12 months.

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