Coinbase shares drop after third-quarter revenue misses analysts’ estimates

Earnings

In this article

The logo for Coinbase Global Inc, the biggest U.S. cryptocurrency exchange, is displayed on the Nasdaq MarketSite jumbotron and others at Times Square in New York, U.S., April 14, 2021.
Shannon Stapleton | Reuters

Coinbase, the largest cryptocurrency exchange in the U.S., reported third-quarter earnings after the bell on Tuesday and missed analysts’ estimates on revenue. The stock sank in extended trading.

Here’s how Coinbase did compared with analyst estimates:

  • Earnings: $1.62 a share
  • Revenue: $1.31 billion vs. $1.57 billion consensus estimate, according to Refinitiv

Coinbase said monthly active transaction users fell from the prior period, dropping to 7.4 million from 8.8 million in the second quarter. It’s up from 6.1 million a year earlier. Trading volume fell to $327 billion from $462 billion in the previous quarter.

“As our year-to-date results have clearly demonstrated, our business is volatile,” the company said in its shareholder letter. “Coinbase is not a quarter-to-quarter investment, but rather a long-term investment in the growth of the cryptoeconomy and our ability to serve users through our products and services. We encourage our investors to take this point of view.”

Much of the company’s success hinges on the performance of digital assets like bitcoin. On Monday, bitcoin hit a new all-time high of $68,000, and ethereum set a new record, topping $4,800. Coinbase said in the report that bitcoin accounted for 19% of trading volume, and ethereum accounted for 22%. The remaining 59% came from other crypto assets, an increase from 50% in the second quarter.

Assets on the platform swelled to $255 billion from $180 billion at the end of June. About 55% of that is from institutional investors with the rest from retail.

Coinbase held its stock market debut in April at $381 a share and was briefly valued at high as $100 billion, on a fully diluted basis. The stock sank below $221 in July but has rallied dramatically in the past month, closing on Tuesday at $357.39.

Net revenue more than quadrupled from a year earlier to $1.23 billion. However, it was down from over $2 billion in the second quarter. Coinbase said it expects monthly transacting users and total trading volume in the fourth quarter to be higher than in the third.

In September, the company scrapped plans to launch a crypto lending product after it revealed that the SEC planned to sue over the product. Also during the quarter, Coinbase announced plans to launch a marketplace to trade nonfungible tokens and allowed customers to deposit paychecks into their accounts.

Facebook, now known as Meta Platforms, recently said it hired Coinbase to deal with logistics for its new digital wallet for cryptocurrencies.

Correction: A prior version of this story used the wrong revenue number.

Products You May Like

Articles You May Like

Inside the ‘Wormhole,’ Relativity Space’s monster factory 3D-printing reusable rockets
When it makes sense to buy extra paper Series I bonds with your tax refund, according to experts
Savers poised for ‘biggest win’ in 2023 as inflation falls. Where to put your cash now
Some of Wall Street’s biggest names are exposed to the Adani Enterprises plunge
Before you enroll in Medicare, what to know about new rules that eliminate coverage gaps

Leave a Reply

Your email address will not be published. Required fields are marked *