Coinbase tops Earnings Expectations

Despite crypto markets ending 2021 on a weak note, crypto exchange Coinbase reported strong fourth quarter earnings.

Centralized exchange Coinbase reported fourth quarter earnings that exceeded analyst expectations, and while the stock popped higher by 5% immediately following the earnings report, Coinbase management soon caused a reversal of those gains by forecasting a more challenging first quarter in the post-earnings conference call.

The company reported fourth quarter earnings per share of $3.32 versus analyst expectations for $1.85 a share. Those earnings came on revenues of $2.5 billion. Management also reported that retail monthly transaction users (MTUs) jumped from 7.4 million in the third quarter to 11.4 million in the fourth quarter.

However in the post-earnings conference call management warned of a slowdown in trading volume for the first quarter. That aligns with the letter to shareholders, which said,

“We enter 2022 with even more unknowns, which make our business all the more difficult to forecast.”

Coinbase management is attributing the drop in trading volume to decreased volatility in crypto markets, along with a drop of roughly 20% in the market capitalization of the cryptocurrency market. The declining market cap is due to geopolitical instability and the Federal Reserve signaling a tightening of financial conditions, according to Coinbase.

When asked if he thought the market was entering a new crypto winter, Coinbase CEO Brian Armstrong said conditions are different this time, and that he doesn’t “expect it to be anything quite that pronounced over time”.

Coinbase also stated it sees increased opportunities and adoption of cryptocurrency. That includes the upcoming launch of its NFT platform, which Coinbase sees as less correlated with the prices of other crypto assets.