Coinbase Global (COIN  ) reported second-quarter earnings which came in slightly above expectations. Shares were initially higher but gave back gains over the next couple of sessions despite strength in most cryptocurrencies and crypto stocks.

Since its initial public offering in early April, Coinbase is down by 33%. Some of the major factors were softness in crypto prices and user complaints about limits on withdrawing money from the brokerage. However, the stock continues to be accumulated by institutions and fund managers like ARK Invest's Cathie Wood who owns $1.5 billion of the stock, equating to 3% of the company.

Inside the Numbers

In Q2, Coinbase reported $3.45 in earnings per share, topping analysts expectations of $2.33 per share in earnings. In total, the company had net profit of $1.6 billion, a nearly 5,000% increase from last year's Q2. Revenue also topped expectations by a decent margin at $2.23 billion vs. $1.78 billion expected.

Of the company's revenue, $1.9 billion was from transaction revenue with $100 million coming from subscription and services revenue. This growth is even more impressive considering that bitcoin prices were down by about 41% during the quarter.

Active monthly users increased to 8.8 million, a 44% increase from the previous quarter with trading volumes increasing by 38% to $462 billion in Q2. It also said that volume significantly increased in crypto assets like ethereum and cardano. In Q1, 39% of trading volume was in bitcoin, while it accounted for 24% of trading volume in Q2.

The company is anticipating that trading volume will be lower in Q3 given trends in the first couple of weeks of the quarter. However, it could certainly change if recent strength in cryptocurrencies and NFTs continues.

Stock Price Outlook

Coinbase is a very tough stock to predict or price given the various risks involved including regulatory. Further, there is the issue of stablecoins which is creating some amount of systemic risk in the sector.

Analysts are forecasting that for the full year the company will earn $7.76 per share on revenue of $6.29 billion. This is certainly a high multiple for Coinbase depending on if it's viewed as a financial stock or at tech stock.

Ultimately, Coinbase's price and direction will largely be determined by the fate of the crypto complex. If prices keep rising, more people will be drawn in and volumes will keep climbing. If prices fall, then people will lose interest, and volumes will diminish.

However, it's possible that cryptos could go up but Coinbase could lose market share to competitors as there are several. So, investors may be better off simply just buying cryptocurrencies given that they have more potential upside.