Coinbase shares tumble after Q4 earnings

[MongiIG]

Crypto exchange Coinbase saw a 5.5% drop in shares all-sessions on the IG platform on Tuesday after it reported a big drop in trading volume.

 Jeremy Naylor | Writer, London | Publication date: Wednesday 22 February 2023 

IGTV’s Jeremy Naylor looks through the numbers which showed a better than expected loss of $2.46 per share on revenue of $629 million.

While that is marginally better than EPS of $2.51 and $588m in revenue anticipated by analysts, it was the drop in trading volumes that concerned many.

Coinbase trading volume plunged to $145 billion in the fourth quarter, compared with $547bn a year earlier.

Retail traders also pulled back significantly, with their trading volume in the quarter plummeting nearly 89% to $20bn.

Coinbase Q4 earnings

One of the world's largest listed crypto exchanges Coinbase reported fourth quarter (Q4) earnings last night.

Despite a slight beat on the earnings per share (EPS), the stock tumbled five and a half percent. Of course, it was a quarter that was dominated by the collapse of FTX last November.

Let's take a look at the figures which as I said slightly better than expected at a loss of 2.46. We'll be looking for a loss of 2.51. Revenues coming through at $629 million against an expectation of $588 million. This time last year that revenue was two and a half billion dollars.

Coinbase trading volumes plunging $145 billion in the fourth quarter compared to 547 billion this time last year. Retail traders also pulled back significantly. Trading volume in the quarter plummeting nearly 89% to just $20 billion.

Share price chart

Let's take a look at the share price chart before we take a look at what happened late last night. Just to explain what's been going on in terms of the longer term picture.

This is the entire trading of Coinbase since it came to the market back in April 2021. It came to the market at $225, which is this red dotted line in the middle here. We have traded above that, in fact the high point back on the 9th November 2021, it was trading at $370.

Now, here we are now here at a trade of $61.39. We've just got the all-sessions trade getting under way here now today on this Wednesday morning, you can see the drop that we saw yesterday resting at the 200 day moving average.

The Coinbase trading volume was really what happened last night and that took completely the traders by surprise. And as a result of that, we saw that stock down.

In among some of the other areas, the markets, subscription services revenue though not doing too bad overall, rising about 33% to $282 million in the period. But that was offset by that big drop in the trading volume.

So the outlook for Coinbase depends on the direction of travel for the crypto markets. But on the whole, at the moment, Coinbase finding the going tough.