Coinbase Slumps After Reporting Lower-Than-Forecast Revenue

Olga Kharif, Bloomberg News

Monitors display Coinbase signage during the company's initial public offering (IPO) at the Nasdaq MarketSite in New York, U.S., on Wednesday, April 14, 2021. Coinbase Global Inc., the largest U.S. cryptocurrency exchange, is set to debut on Wednesday through a direct listing, an alternative to a traditional initial public offering that has only been deployed a handful of times. Photographer: Michael Nagle/Bloomberg , Bloomberg

(Bloomberg) -- Coinbase Global Inc. shares fell nearly 12% in postmarket trading after the biggest U.S. cryptocurrency exchange reported third-quarter results that missed Wall Street’s estimates.

Coinbase, which blamed market turbulence and lower prices in a part of the third quarter, posted revenue of $1.24 billion, lower than the $1.57 billion forecast by analysts.

Key Insights

Coinbase said monthly transacting users on its platform reached 7.4 million, down from 8.8 million in the second quarter. Its verified users grew to 73 million.
The company also updated its full-year average monthly transacting user guidance. It now expects between 8 million and 8.5 million such users, up from 5.5 million to 8 million projected in August.
Coinbase benefited from listing Shiba Inu meme token, popular with investors, in September. That, combined with a bull market in crypto that’s pushing more investors to step in, has led to a surge in downloads of Coinbase’s main mobile app.
Coinbase is also diversifying its services, with plans to launch derivatives as well as a platform for trading nonfungible tokens. The NFT business could prove highly lucrative: Revenues of established marketplaces like OpenSea have exploded, and OpenSea takes a 2.5% cut of transactions.
At the same time, in September, Coinbase has had to shelve its plans for Lend, which was supposed to let users earn interest on coin holdings, due to pressure from the Securities and Exchange Commission.
The company has been beefing up its customer care in response to user complaints.

Market Reaction

While Coinbase’s shares slumped after its April debut as a public company, they hit an all-time high on Monday and are up by about 40% since they started trading.

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