As a seasoned crypto investor with a decade of rollercoaster rides under my belt, I can’t help but feel a sense of familiarity when seeing Coinbase’s earnings fall short of expectations. The crypto market has always been unpredictable, and this “Crypto Winter” seems to be no exception.
On Wednesday evening, Coinbase’s shares dropped following an after-hours trade, as the company’s third-quarter earnings and revenues didn’t meet the projections made by financial analysts on Wall Street. The exchange attributed this shortfall to the current “slow” market conditions.
According to FactSet’s data, the crypto exchange generated a total quarterly revenue of approximately $1.2 billion, slightly below the average forecast of $1.26 billion.
Crypto Winter Takes its Toll on Coinbase Earnings
On a recent report, Coinbase Global Inc. announced on Wednesday that their third-quarter revenue for their fiscal year 2024 had reached approximately $1.2 billion. This figure is almost twice as much as what they reported in the same quarter the previous year.
Leaving aside specific items, the company announced that diluted earnings per share were $0.28. This is a substantial improvement compared to a $0.01 loss per share in the same quarter last year. Yet, these figures fell short of analysts’ expectations. For the quarter, net income climbed from a loss of $2.3 billion to $75.5 million compared to the previous year.
Even though the market was less active, Coinbase noted an average increase in growth for their native units within staking, on-platform USD Coin, and custodial services. This expansion helps ensure a diverse income stream in the long run,” as stated in their financial report.
Lately, Coinbase has rolled out artificial intelligence (AI) assistants designed to handle cryptocurrency portfolios and communicate directly with the blockchain on their underlying network.
Diversifying Amidst Falling Trading Fees
In simpler terms, Coinbase’s main income, which comes from transaction fees, dropped by 27% during the third quarter due to a persistent decline in trading volumes at American exchanges. This decrease in trading volume is largely attributed to reduced volatility in cryptocurrencies, with an approximate 5% drop when comparing the average for Q3 against that of Q2, as stated in their earnings report.
After the publication of the report, nearly 7% of the exchange’s shares dropped. However, on a yearly basis, they have risen approximately 22%, demonstrating the overall optimistic trend in digital assets.
In the midst of an ongoing regulatory uncertainty in the US, Coinbase has been introducing a series of new products this year. The latest addition is the feature that allows Visa debit card holders to swiftly deposit funds into their Coinbase accounts. To reduce its dependence on heavy trading volumes for revenue, the exchange is expanding its product portfolio, which includes strengthening its custodial services and getting involved in the tokenization of real-world assets.
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2024-10-30 23:52