Coinbase had some good news in its first-quarter earnings report on Thursday. They reported better revenue than expected. However, their stock was trading about 2% lower in extended trading.
Here’s a breakdown of how they did compared to what analysts expected:
- Earnings: $4.40 per share, much higher than the $1.09 average estimate from analysts.
- Revenue: $1.64 billion, beating the expected $1.34 billion.
Coinbase is the main place in the U.S. for buying and selling digital tokens. They reported a net income of $1.18 billion, or $4.40 per share, compared to a loss of $78.9 million, or 34 cents a share, from a year ago. This is a big turnaround from last year when they reported their first profit in two years.
Their profit in the quarter includes a $650 million gain on crypto assets they hold for investment, which is related to new accounting standards they adopted.
They made $935 million from consumer transactions in the quarter, more than doubling from the same period last year. Their total transaction revenue almost tripled to $1.08 billion. Transaction revenue has always been a big part of their income, while subscriptions and services brought in $511 million for the quarter.
Coinbase shares went up by almost 9% on Thursday before the report came out. They’ve gone up about 32% so far this year after going up almost five times in 2023. The stock usually does well when Bitcoin’s value goes up because more people trade, which means more business for Coinbase.
In the first quarter, bitcoin reached a new all-time high above $73,000, and Ethereum, the second-biggest digital asset, had its first major upgrade in over a year.
A lot of big investors have been getting into cryptocurrency since the SEC approved new U.S. spot bitcoin exchange-traded funds. Many of these funds work with Coinbase as their custody partner. By the end of the first quarter, these funds had brought in more than $50 billion. But things slowed down a bit after April 8, according to analysts from Raymond James.
Bitcoin’s value has gone down a bit, and fewer people are trading on Coinbase. Coinbase is also dealing with a legal battle with the SEC. In March, a judge said the SEC’s claim that Coinbase sold securities without registering them could go to trial. Another challenge is competition from Crypto.com, which has been gaining back market share recently.
Insiders at Coinbase have been selling a lot of their shares, too. According to Raymond James analysts, multiple insiders, including four top executives, sold $383 million worth of shares in the first quarter.
This is more than double what was sold in the fourth quarter of 2023 and the most since Coinbase went public in 2021. Fred Ehrsam, one of the co-founders, sold shares worth $129 million.
