The Earnings Roller Coaster
Coinbase, the heavyweight of cryptocurrency exchanges in the U.S., has taken a nosedive in net income, posting a staggering 75% decrease in its third-quarter report. Despite a modest gain during the day, COIN shares plummeted by 13.10% in after-hours trading following the release, catching investors off guard.
Revenue and Profit: A Closer Look
The firm’s revenue for Q3 stood at $1.235 billion, a smackdown against analyst projections of $1.614 billion. However, the silver lining (if you squint hard enough) comes in the form of profits totaling $406 million, which, while a blow at 74.7% down from the previous quarter, did manage to beat expectations slightly. With earnings of $1.62 per share falling short by 10% as measured against FactSet’s consensus, it’s safe to say, some investors were left scratching their heads.
The Bright Side? Maybe!
In the midst of these figures, Coinbase touted the quarter as a “strong one.” They pointed to a growing engagement among investors and the rollout of new products, including an eagerly awaited non-fungible token marketplace. They insisted that investing in Coinbase should be viewed through the lens of long-term growth rather than short-term profits, which might make you feel a bit more cozy at night.
Relationship with the SEC: Thawing Ice?
Coinbase has had a rocky relationship with the U.S. Securities and Exchange Commission (SEC), akin to two neighbors feuding over a fence. CEO Brian Armstrong revealed that their latest meet-up with SEC Chair Gary Gensler was productive—a plot twist we didn’t see coming! Imagine showing up with cookies to smooth things over. This could pave the way for a more harmonious future, if that’s what you want to call it.
Expanding Horizons
Despite the downswing, Coinbase reported a 41% growth in subscription services revenue, clocking in at $145 million. This innovative revenue stream is largely fueled by programs like Ethereum 2.0 staking and various services that get users to engage without just trading. With 7.4 million Monthly Transacting Users finding new avenues for engagement beyond mere trading, they appear to be broadening their horizons nicely.
Trading Metrics: The Good, the Bad, and the Ugly
The trading volume on the platform for Q3 was $327 billion, marking a 29% drop from the previous quarter. Notably, institutional investors dominate this space with a whopping $234 billion traded. Ethereum once again outshined Bitcoin in trading volume, taking a 22% share compared to Bitcoin’s 19%. With a growing interest in ‘other’ cryptocurrencies, which accounted for 59% of total volume, the market is showing signs of diversification, even if it’s still a little messy.
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