Coinbase shares fall as muted crypto trading leads to a third-quarter miss
Coinbase Wednesday reported weaker-than-expected third-quarter results, weighed down by muted trading in the cryptocurrency market.
While trading is likely to be more lively in the fourth quarter, an October drop in the price of ether could offset current quarter growth in subscription and services, the company said.
The stock was last lower by 4% in extended trading. Earlier it fell as much as 7%.
Here's what the company reported for the third quarter compared with what Wall Street expected, according to a survey of analysts by LSEG:
Coinbase, which operates the largest U.S. marketplace for buying and selling cryptocurrencies, reported net income of $75.5 million, or 28 cents per share, compared with a year-ago loss of $2.3 million, or 1 cent a share.
Net income in the latest quarter included $121 million in pretax losses on Coinbase's crypto investment portfolio, the vast majority of which were unrealized, as crypto prices were lower on Sept. 30 compared with June 30.
Within its core business, revenue from retail trading grew 98% to $483.3 million from the previous year, while institutional revenue brought in $55.3 million during the quarter, a 292% jump from the same period a year ago. Total transaction revenue was $572.5 million, a 98% increase year-over-year.
Revenue from Coinbase's subscription and services – which includes stablecoins, staking and leverage for Prime traders among other things – saw a more modest decline of 7% to $556.1 million.
The company forecasted flat growth in the category, reflecting a 10% decline in the price of ether in October compared to its third-quarter average, as well as interest rate cuts reflecting market expectations, among other headwinds.
The cryptocurrency market has been in a bit of a