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

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Artwork by Axel Rangel, modified by Blockworks

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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. 

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. 

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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.


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