Coinbase’s third-quarter earnings report was below expectations, leading to a nearly 10% drop in the company’s shares. The largest U.S. crypto exchange fell short of both profit and revenue estimates, with revenue coming in at $1.2 billion, $60 million lower than what Wall Street analysts had predicted. Earnings per share also missed the mark, with the company reporting 28 cents per share instead of the expected 41 cents.
The decline in performance can be attributed to a decrease in activity on the platform, where Coinbase generates most of its revenue from trading fees. Total trading volume was down 18% from the previous quarter, and total transaction revenue decreased by 27%. The company attributed these declines to a general downturn in the U.S. spot market and unfavorable economic conditions, affecting both retail and institutional users.
Despite the disappointing numbers, Coinbase remains profitable. CEO Brian Armstrong noted the company’s efforts to diversify revenue streams away from transaction fees, which are more volatile and market-dependent. The platform has seen a significant recovery since last year, when shares hit an all-time low of $33 following FTX’s collapse.
Transaction revenue and total revenue have increased by 98% and 78% respectively compared to the previous year. Subscriptions, stablecoins, and Base—Coinbase’s Ethereum L2 network—have become key areas of growth for the company. Base transactions were up 55% in the quarter, and stablecoin revenue has shown steady growth, albeit at a slower pace in Q3. Armstrong also mentioned that subscription and service fees are projected to exceed $2 billion by the year’s end.
Coinbase’s share price is often influenced by the performance of Bitcoin and the broader crypto market, as higher prices typically correlate with increased demand and transaction volume on the platform. In September, when the Fed lowered interest rates, Bitcoin rallied, and Coinbase shares rose by 7% as investors turned to riskier assets like cryptocurrencies.
However, the latest earnings report from Coinbase has shown that this correlation is not always perfect. Despite Bitcoin approaching an all-time high, the company’s shares experienced a slump. As of mid-day Thursday, Bitcoin was trading around $70,500, having surpassed $73,000 earlier in the week.
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