Coinbase shares plunge on big earnings and revenue miss

Rising bitcoin prices lead to surge in Coinbase’s quarterly profit

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Shares in Coinbase Global Inc. surged over 12% in late trading today after the cryptocurrency exchange provider surprised investors by smashing revenue expectations and reporting a profit, driven by bitcoin price rises seeing investors return to cryptocurrency markets.

For the quarter that ended Dec. 31, Coinbsaed reported adjusted earnings per share of $1.04, up from a loss of $2.46 per share in the same quarter of last year, on revenue of $954 million, up 41% year-over-year. Smashed might not be a strong enough word to describe the beats, as analysts had expected earnings per share of two cents on revenue of $826.1 million.

When bitcoin increases in price – the cryptocurrency has been increasing in value since passing $30,000 in October, so do Coinbase trading numbers, with the company reporting a nearly 100% increase in trading volume over the previous quarter to $154 billion. The volume was also higher than the $145 billion Coinbase saw in the fourth quarter of 2022.

While the increasing price of bitcoin is resulting in a return of interest in cryptocurrency, bitcoin itself it only accounted for 31% of trades on Coinbase in the quarter, down from 35% in the same quarter of last year and 38% in the previous quarter. Ethereum accounted for 15% of trading volume, the USDT stablecoin came in at 13% and other crypto assets at 42%.

Transaction revenue came in at $529.3 million in the quarter, up from $322.1 million in the fourth quarter of 2022 and subscription revenue was $375.4 million, up from $282.8 million. Notably, Stablecoin revenue accounted for $171.6 million in the quarter, up from $145.7 million a year prior.

Recent business highlights include Coinbase announcing in October that it was expanding its operations in Singapore after securing regulatory approval from the country’s central bank. The approval allows the company to expand its operations in Singapore to include digital token services and payments to individuals and institutions.

In December, Coinbase announced an expansion to its digital wall that allows users to send crypto links via messaging apps or email. The service is aimed to make it easier for users to make crypto transfers without the need for advanced knowledge.

For the full year 2023, Coinbase reported adjusted earnings per share of 37 cents, a massive turnaround from a loss of $11.83 per share in 2022, on revenue of $2.927 billion, down from $3.15 billion the year before.

“In 2023, we saw our operational rigor pay off,” Coinbase said in a letter to investors. “We achieved our financial goal, launched new innovative products, strengthened our competitive position and doubled down on our efforts to create momentum for a workable regulatory framework for crypto in the US.”

For its fiscal first quarter of 2024, Coinbase said that it expects subscription and services revenue to come in at $410 million to $480 million. The company did not provide an earnings per share outlook, but given how much it wildly goes up and down every quarter, you can’t blame them.

Photo: Coinbase

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