Coinbase Stock Whipsaws After Close on Better-than-expected Earnings

Interest on Coinbase’s USDC reserves bolstered the exchange’s bottom line in the third quarter of 2022

February 21, 2023 04:20 pm

Artwork by Axel Rangel, modified by Blockworks

Coinbase posted higher-than-expected fourth quarter revenue after the close Tuesday, sending shares down an initial 1% in after-hours trading.

The cryptocurrency exchange reported $605 million in revenue for the last quarter of 2022.

Coinbase brought in $322 million in transaction-based revenue, compared to $590 million in the third quarter.

COIN shares were trading lower Tuesday before the earnings release after an explosive start to 2023, which put the stock more than 80% higher year-to-date. The rally was partially spurred by news that a proposed class action lawsuit against the exchange over unregistered securities was dropped.

Newsletter

Subscribe to The Breakdown

The exchange brought in $182.2 million in interest income in the fourth quarter. Coinbase’s staking revenue came in at $62.4 million.

But, weeks later, Kraken’s settlement with the SEC over its staking product sparked new concerns about the future of staking, fueled, in part by Coinbase CEO Brian Armstrong’s highly-shared Twitter thread. Coinbase has said it has plans to move away from transaction-based revenue and that its staking services are a large part of that vision.

Loading Tweet..

Coinbase’s saving grace for the third quarter of 2022, otherwise a disappointing stretch, was the interest income earned on USDC reserves, which saw a boost given higher interest rates in the US.

2022 as a whole was strong for interest income; in the second quarter, the figure increased five times to $32.5 million. In the third quarter of 2022, the figure jumped 213% to $101.8 million.

Regulatory clarity is essential for Coinbase and other companies in continuing to safely innovate in the space, Armstrong said during Coinbase’s earnings call Tuesday.

“In those conversations, our agenda is very clear,” Armstrong added. “Not everything in crypto is a security, that is not the law today and that should not be the law tomorrow.”

Updated Feb. 21, 2023 at 5:56 pm ET: Added Brian Armstrong quotes from Coinbase’s earnings call.

Get the news in your inbox. Explore Blockworks newsletters:

The Breakdown: Decoding crypto and the markets. Daily.
0xResearch: Alpha in your inbox. Think like an analyst.

Tags

Coinbase

Newsletter

The Breakdown

Decoding crypto and the markets. Daily, with Byron Gilliam.

Upcoming Events

Digital Asset Summit 2026

Javits Center North | 445 11th Ave

Tues - Thurs, March 24 - 26, 2026

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

buy tickets learn more

recent research

Research

Kinetiq Protocol: From LST Infrastructure to HIP-3 Deployer

Kinetiq has established itself as Hyperliquid's dominant liquid staking protocol, holding 82.5% of LST market share with $610M in TVL. The protocol is now expanding beyond its kHYPE staking core into higher take-rate verticals: iHYPE for institutional custody rails, Launch for HIP-3 capital formation, and Markets for builder-deployed perpetuals. We view Markets, launching Jan. 12, as the highest-potential product line given its mechanically scalable, activity-linked unit economics. Near-term revenue remains anchored by kHYPE's KIP-2 fee schedule (~$1.6M annualized), while Markets provides embedded optionality if HIP-3 economics normalize post-Growth Mode. KNTQ's setup is relatively clean: zero insider unlocks until November 2026, 6.2% buyback yield from staking revenue, and cleared airdrop overhang. Risks center on unproven Markets execution, declining kHYPE TVL despite ongoing incentives, and competition from Hyperliquid's native initiatives.

by Shaunda Devens