Coinbase drops after quarterly results fall short of estimates

Total revenue increased to $1.21bn, less than analysts’ forecast of $1.25bn.

Shares of Coinbase Global dipped in late trading after the largest US crypto exchange posted results below Wall Street expectations even though revenue almost doubled.

Total revenue increased to $1.21 billion, less than analysts’ forecast of $1.25 billion. Net income was $75 million, below $112.2 million expected by analysts surveyed by Bloomberg. The company lost $2.3 million in the year-ago period. An accounting change first adopted in the second quarter resulted in Coinbase pricing its digital assets to market value, resulting in a $121 million pre-tax loss in the most recent quarter, according to the company.

“What’s super important here is that Coinbase met all of its financial objectives,” Chief Financial Officer Alesia Haas said in an interview, noting the company met metrics like positive net income and its expense guidance. The company grew its workforce by 5% during the quarter, she said. The company authorised a $1 billion share repurchase program.

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Coinbase said in a shareholder letter that it expects current-quarter subscriptions and services revenue to be between $505 million and $580 million. In October, the company said it generated $190 million in transaction revenue.

“As we go into Q4, we are seeing an increase in volatility heading into the election,” Haas said. “Crypto markets turn very quickly.”

Revenue was down 18% from the second quarter as crypto prices went sideways and down after Bitcoin hit its all-time high in March. Many retail traders left the market as prices went south. Bitcoin resumed rising in October, and is inching closer to its all-time high, and that price action may lure more investors back into the market.

Coinbase is still facing uncertainty over a lawsuit filed against it by the Securities and Exchange Commission last year. Outcome of US elections, and the next administration’s support of crypto, is yet another wrinkle.

While shares of the San Fransisco-based firm have risen around 27% so far this year, they’re lagging the 70% gain registered during the same period by crypto market bellwether Bitcoin. The stock was down about 3% in late trading Wednesday.

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