Crypto Decoded
Crypto Decoded

Coinbase shares drop after third-quarter revenue misses analysts' estimates

Key Points
  • Coinbase reported weaker-than-expected revenue for the third quarter.
  • The number of monthly transacting users dropped from the prior period.
  • Both bitcoin and ethereum hit new all-time highs this week.

In this article

Mizuho's Dan Dolev breaks down Coinbase's earnings
Mizuho's Dan Dolev breaks down Coinbase's earnings

Coinbase, the largest cryptocurrency exchange in the U.S., reported third-quarter earnings after the bell on Tuesday and missed analysts' estimates on revenue. The stock sank more than 13% in extended trading.

Here's how Coinbase did compared with analyst estimates:

  • Earnings: $1.62 a share
  • Revenue: $1.31 billion vs. $1.57 billion consensus estimate, according to Refinitiv

Coinbase said monthly transacting users fell from the prior period, dropping to 7.4 million from 8.8 million in the second quarter. The number was up from 6.1 million a year earlier. Trading volume fell to $327 billion from $462 billion in the previous quarter.

"As our year-to-date results have clearly demonstrated, our business is volatile," the company said in its shareholder letter. "Coinbase is not a quarter-to-quarter investment, but rather a long-term investment in the growth of the cryptoeconomy and our ability to serve users through our products and services. We encourage our investors to take this point of view."

Much of the company's success hinges on the performance of digital assets like bitcoin. Coinbase said in August it expected lower trading volume and monthly transacting users in the third quarter after crypto assets dipped during the summer.

This is about building out the ecosystem of the digital economy, says JMP Securities' Ryan
This is about building out the ecosystem of the digital economy, says JMP Securities' Ryan

On Monday, bitcoin hit a new all-time high of $68,000, and ethereum set a new record, topping $4,800. Coinbase said in the report that bitcoin accounted for 19% of trading volume, and ethereum accounted for 22%. The remaining 59% came from other crypto assets, an increase from 50% in the second quarter.

Assets on the platform swelled to $255 billion from $180 billion at the end of June. About 55% of that is from institutional investors with the rest from retail.

Coinbase held its stock market debut in April at $381 a share and was briefly valued at high as $100 billion, on a fully diluted basis. The stock sank below $221 in July but has rallied dramatically in the past month, closing on Tuesday at $357.39.

Net revenue more than quadrupled from a year earlier to $1.23 billion. However, it was down from over $2 billion in the second quarter. Coinbase said it expects retail monthly transacting users and total trading volume in the fourth quarter to be higher than in the third.

In September, the company scrapped plans to launch a crypto lending product after it revealed that the SEC planned to sue over the product. Also during the quarter, Coinbase announced plans to launch a marketplace to trade nonfungible tokens and allowed customers to deposit paychecks into their accounts.

Facebook, now known as Meta Platforms, recently said it hired Coinbase to deal with logistics for its new digital wallet for cryptocurrencies.

Correction: A prior version of this story used the wrong revenue number.

WATCH: Coinbase shares dip after revenue miss

Coinbase dips after Q3 revenue miss
Coinbase dips after Q3 revenue miss