(Bloomberg) -- Shares of Coinbase Global Inc. fell the most in more than two years after the largest US crypto exchange posted results late Wednesday that were below Wall Street expectations.
Total revenue increased to $1.21 billion, less than analysts’ forecast of $1.25 billion. Net income was $75 million, below the $112.2 million expected by analysts surveyed by Bloomberg. The company lost $2.3 million in the year-ago period. An accounting change first adopted in the second quarter resulted in Coinbase pricing its digital assets to market value, resulting in a $121 million pre-tax loss in the most recent quarter, according to the company.
“Overall results fell short of expectations, but we see Coinbase continuing to execute in emerging areas of its business, welcoming potential avenues of future growth,” analysts at JPMorgan Chase & Co. wrote in a note. JPMorgan has a “neutral” rating on Coinbase.
Coinbase said in a shareholder letter Wednesday that it expects current-quarter subscriptions and services revenue to be between $505 million and $580 million. In October, the company said it generated $190 million in transaction revenue.
Coinbase dropped 15% to $179.25 on Thursday, the biggest one-day decrease since July 2022. That reduced the stock’s increase for the year to around 3%. Crypto market bellwether Bitcoin has jumped more than 60% in 2024.
One reason for this lack of enthusiasm for the stock appears to be the drop in interest from individual investors in trading digital assets. While this bread-and-butter customer of Coinbase’s waded back into trading at the beginning of the year, many of them have left since, with Bitcoin trading sideways for months after hitting an all-time high in March. Bitcoin traded just below the all-time high of almost $74,000 on Monday, before paring the increase.
“Ultimately the shortfall this quarter was non-stablecoin trading activity, which we expect will resume in due time. As non-stablecoin trading rebounds, so will aggregate retail pricing and Coinbase profitability,” JPMorgan said.
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