Coinbase’s Revenue Exceeds Expectations Following Bitcoin Rally

(CTN News) – According to Coinbase’s first-quarter earnings report, revenue was better than expected. Extended trading saw the stock fall about 4%.

Comparing the company’s performance to LSEG’s consensus, here’s what happened.

• Earnings per share: $4.40. Analysts expected $1.09.

• Estimated revenue: $1.34 billion vs. $1.64 billion

Compared to a year-ago loss of $78.9 million, or 34 cents per share, Coinbase, the primary marketplace for buying and selling digital tokens, reported net income of $1.18 billion, or $4.40 per share. The company reported a profit in February for the first time in two years.

The company’s adoption of updated accounting standards resulted in a mark-to-market gain of $650 million on crypto assets held for investment.

The company generated $935 million in consumer transaction revenue for the quarter, an increase of over 100% from the same period a year earlier. In the quarter, revenue from transactions almost tripled to $1.07 billion.

Revenue for the quarter was driven primarily by transaction revenue, with subscription and services revenue contributing $511 million.

Following Thursday’s report, Coinbase shares rose almost 9% and have increased by roughly 32% since 2023, when they nearly fivefolded. A large rise in bitcoin’s value tends to have a positive effect on the stock, since it leads to increased trading volumes and demand for other services.

Ethereum, the second-largest digital asset, underwent its first major upgrade in over a year, and Bitcoin hit a new all-time high above $73,000 in March.

As a result of the SEC’s approval of several exchange-traded funds for spot bitcoin, the industry has also seen an influx of institutional investors. A number of ETFs have partnered with Coinbase as their custody partner. During the first quarter, the funds generated more than $50 billion.

Since April 8, Raymond James analysts say, cumulative net inflows have fallen alongside a slippage in bitcoin prices.

Raymond James analysts wrote in a note this week that Bitcoin prices have drifted modestly lower since mid-March as inflows moderated. As a result, coinbase’s platform is seeing a significant drop in trading volumes since early March.”

Moreover, Coinbase remains embroiled in legal battles with the SEC. Earlier this year, a judge ruled that a jury can hear the regulator’s allegations about unregistered sales of securities by the exchange.

A new competitor, Crypto.com, has recently regained market share, and is another potential headwind.

Sales by insiders

During the first quarter, insiders at Coinbase, including four members of its C-suite, collectively sold $383 million of the company’s shares. The insider sale was more than double its volume in the fourth quarter of 2023, and it was the biggest since the company went public in 2021.

It was reported by Raymond James that Fred Ehrsam, the co-founder and board member, sold his shares for $129 million.

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