U.S. crypto exchange giant Coinbase released its Q1 earnings report, but revenues were crushed along with the company's stock value as the crypto market plummeted. With lower trading revenues and higher expenses, Coinbase recorded a net loss 430 million dollars for the first quarter of the year.
The biggest earnings report in the crypto industry looked grim. Coinbase Global Inc. wasn't able to even get close to the revenue figures the firm reported for Q4 2021. Revenues were down from $2.49bn to $1.16bn, while increased expenses led to a $430mn loss.
Crypto activity downturn
Coinbase makes almost 90% of its profit from trading fees, some of which are the highest in the industry. A massive downturn in crypto markets this year will have affected these high-earning transaction fees for the firm. A equity research analyst commented as follows:
“Despite the downturn in crypto activity, [the first quarter]was marked by few sudden price swings which can lead to higher volumes on increased volatility. The period was instead marked by a steady, continuing decline with periods of range-bound markets leading to relatively muted volumes.” - John Todaro, Equity reasearch analyst at Needham & Co.
Other influences on Coinbase revenue include the lackluster response to its much-hyped NFT marketplace. The company only granted access to a handful of users which resulted in very low trading volumes when compared to its rivals. Coinbase’s monthly transacting users (MTUs) may have also fallen for a quarter that saw crypto markets largely in consolidation.
Coinbase stock down 75% from IPO
Wall Street appears to have factored in the underwhelming earnings report as Coinbase stock has taken a massive hit since the start of this week. According to MarketWatch, COIN slumped 19.5% on Monday, to wind up at just $83.45 in after-hours trading. The stock price has crashed a whopping 54% over the past month which is more than the crypto market itself has. COIN is currently at an all-time low, down more than 80% from its November high of $342.
