Coinbase has conducted two rounds of substantial job cuts and tweaked its compensation policies as well in pursuit of expense discipline

Coinbase Global Inc. saw better crypto currency movement in January following a dismal end to 2022, but Wall Street is focused on the long term.

Particularly, in the wake of Coinbase’s Q4 report, analysts are curious about the firm’s target for positive adjusted earnings before interest, taxes, depreciation and amortization (Ebitda) irrespective of market conditions. Coinbase has conducted two rounds of significant job cuts and modified its compensation policies in pursuit of expense discipline.

We aspire to be an all-weather company, CFO Alesia Haas said on the earnings call Tuesday afternoon.

There are also regulatory concerns dogging Coinbase. With a recent clampdown by the US Securities and Exchange Commission (SEC) on other crypto players, some analysts are worried about whether aspects of Coinbase’s business will face pressure.

Coinbase shares were near flat in Wednesday morning trading after the report.

DA Davidson analyst Christopher Brendler saw an improved profit story coming out of the latest quarter, though he maintained a neutral rating on the stock amid regulatory worries.

Although underlying drivers were more mixed (interest income huge, retail trading not), we believe these results are encouraging and materially improve the profit outlook, Brendler wrote in his note to clients.

Needham’s John Todaro maintained a buy rating on the stock ‘as the company focuses on managing expenses tightly amidst a more attractive higher trading volume/crypto price backdrop’ in 2023. But he too is scrutinizing prospective regulatory effects, specifically as Coinbase’s Q4 results gained from interest income linked to the USDC stablecoin.

As a majority of crypto assets dropped in value with rising interest rates, USDC outstanding supply stayed comparatively steady in a higher rate environment, he wrote. As such, it is not unreasonable to contemplate USDC supply to remain flat or even slightly grow in a rising interest rate environment, which means this business could act as a growing buffer to trading volumes.

Still, there is the likelihood that any new rules ‘could result in declining USDC outstanding supply and interest income on the back of the decline,’ he noted.

Not everyone was sold on the firm’s aims, with Jefferies analyst Trevor Williams stating that he saw a ‘murky path back to profitability’ for the firm.

Williams further stated that he was ‘still sceptical of out-year profitability potential absent a higher-for-longer crypto backdrop or further OpEx (operating-expense) cuts.’ He maintained a hold rating on Coinbase’s stock.