- Coinbase's quarterly trading volume came in well below analyst predictions.
- Trading volume is a prime driver of revenue for the company through transaction fees. It also signals the overall strength of the cryptocurrency market.
- The company's loss per share was wider than analysts had predicted.
|Coinbase Earnings Results|
|Metric||Beat/Miss/Match||Reported Value||Analysts' Prediction|
|Earnings Per Share||Miss||-$2.43||-$2.41|
|Total Trading Volume||Miss||$159.0B||$166.3B|
Source: Predictions based on analysts' consensus from Visible Alpha
Coinbase Financial Results: Analysis
Coinbase Global, Inc. (COIN), one of the world's top cryptocurrency exchanges, posted a wider-than-expected net loss in the third quarter even as a decline in revenue met expectations as crypto trading diminished and trading volume shifted away from the U.S., the company's primary area of focus.
Coinbase lost $2.43 per share, compared with a consensus estimate of $2.41. Revenue fell by 55% to $600 million, in line with analyst predictions.
Customer interest in cryptocurrency exchanges has slid in recent months, reflecting the declining prices of many leading digital tokens and the inaccessibility of mining hardware related to supply chain issues. Still, the spread of blockchain technology across industries and increasing acceptance of cryptocurrencies by government regulators could lead to additional interest in coming years.
COIN Total Trading Volume
Coinbase's total trading volume dropped by 51% to $159 billion, below analyst expectations. Coinbase's quarterly trading volume reflects the total U.S. dollar-equivalent value of matched trades that take place between a seller and buyer on the company's trading platform. The amount of trading directly affects the company's revenue, which is largely derived from transaction fees.
COIN Outlook and Stock Performance
Coinbase said it expects transaction revenues to remain depressed due to macroeconomic conditions and the crypto market for Q4. It predicts that these headwinds will persist and perhaps grow more intense into 2023.
Shares of Coinbase were up by 5% in after-hours trading as of 4:44 p.m. New York time after falling earlier in the day. Coinbase stock has plunged by 84% in the past year, compared with a 20% drop for the S&P 500 Index.
Coinbase's next earnings report (for Q4 FY 2022) is expected to be released on Feb. 23, 2023.
Coinbase Global Inc. "Shareholder Letter Third Quarter 2022," Pages 1-4, 21.
Visible Alpha. "Financial Data."
CoinMarketCap. "Top Cryptocurrency Exchanges Ranked by Volume."
Yahoo! Finance. "Coinbase Earnings Preview: Here Are the Three Factors Analysts Are Watching."
Coinbase Global Inc. "Shareholder Letter Third Quarter 2022," Pages 16-17.
Yahoo! Finance. "Coinbase Global, Inc. (COIN)."
TradingView. "Price Chart: COIN and S&P 500."
MarketScreener. "Coinbase Global, Inc. (COIN)."