Forecasting volatile revenue streams

Looking at Coinbase revenue, you can see the massive ebb and flows. I was curious if anyone had insight into how they would manage projections or even forecast revenue for that matter? I imagine the majority of the forecast is just a % fee of total trading volume but when they earn 50% of their revenue in one month, how do they account for those scenarios? I would think they often are conservative with their estimates to be on the safe side but would love to hear other's opinions.

4 Comments
 

In all seriousness, this is a tough one.

If that much of their revenue is driven by a single month each year then you could look to retail (admittedly still doesn’t spike that high) but I would be interested in Coinbase’s explanation for the reason.

You could also look to fade growth based on the profile of similar high growth companies have performed post listing.

Wonder if Monte Carlo simulation could be one of the tools?

 

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