Coinbase Stock (COIN) Jumps 16% After Earnings; Analysts praise the results but worry about regulatory uncertainty

Coinbase (COIN) shares are up sharply after the company’s first-quarter results topped analyst estimates on both earnings and losses per share.

“Overall, we were pleased with the results and would characterize the near-term economic outlook as modestly positive to expectations,” Devin Ryan, JMP Securities’ director of financial technology research, wrote in a note to investors. “Given the continuation of a challenging environment, combined with all the regulatory headlines, it was nice to see a relatively clean quarter with respectable results, all things considered.”

The crypto exchange reported Thursday evening an adjusted loss per share for the first quarter of $0.34 against forecasts for a loss of $1.45. Revenue for the quarter of $773 million topped estimates of $655 million and was up 23% from the fourth quarter.

Barclays’ analyst Benjamin Buddis was particularly impressed with the increase in fixed income as a result of higher spreads on certain “simple” (ie non-Advanced Trade) trades that rolled out through Q1. Although the trend “may not be sustainable in the long term,” he wrote, “[it] seems to be pretty sticky for now.”

Analysts at JPMorgan were somewhat more dovish, noting that volumes are under pressure so far in the second quarter. They also noted that the decline in the USDC market value is worrying, while betting services are not performing as well as expected.

“Although earnings were significantly better than expected, the overall outlook does not look as good,” they wrote, continuing with a neutral rating on the stock.

Goldman Sachs was also cautious, recalling the “highly uncertain” regulatory outlook.

“We see risks that limited bandwidth in Congress increases the likelihood that regulatory developments will be largely driven by regulators, rather than policymakers,” the Goldman team wrote. “Therefore, we see limited near-term catalysts for increased retail engagement, adoption in the US”

Goldman maintained its sell rating on the stock given the “lack of visibility around organic growth” and continued uncertainty about the impact of regulation. However, the bank raised its 12-month price target to $45 from $40, still about 20% lower than today’s price of $57.60.

Coinbase, for its part, has been extremely active in promoting better regulatory transparency in Washington DC, continuing these efforts even after receiving a Wells notice from the US Securities and Exchange Commission (SEC), informing the company of plans to implement a enforcement action against exchange and its betting services.

Shares were ahead 17% early Friday afternoon, reversing some significant losses over the past six weeks and now higher by 70% year to date.