Coinbase Global, Inc. (COIN), the second-largest cryptocurrency exchange by trading volume, likely logged a fourth consecutive quarter of losses as transaction revenue plummeted and crypto prices stagnated for almost a year.
Key Takeaways
- Coinbase will likely report EPS of -$2.48 vs. $3.33 for the same period in the prior year.
- Revenue probably plunged more than 75% to $588.6 million.
- Coinbase's trading volume fell throughout 2022 amid a slump in cryptocurrency prices and the collapse of the FTX exchange.
- The firm also faced regulatory challenges, including a $100 million fine levied by U.S. regulators over compliance issues.
Coinbase probably posted a loss of $568.1 million for the fourth quarter after posting a profit over the same period in the prior year, according to estimates compiled by Visible Alpha. Earnings per share (EPS) is expected to be -$2.48. Revenue likely plunged by more than three quarters to $588.6 million, the lowest in two years.
Trading volume on Coinbase's exchange platform fell each quarter of 2022 as investors shied away from cryptocurrencies amid a market slump. The high-profile collapse of the FTX exchange in November exacerbated investor reluctance over concerns that their money could be permanently lost in similar situations at other exchanges.
Coinbase also faced mounting regulatory concerns late last year. In January, the firm reached a settlement with New York regulators including a $100 million fine for compliance and know your client (KYC) issues.
A silver lining for Coinbase is that, as one of the largest exchanges with a reputation among customers for trustworthiness, declines in trading volume slowed in the final months of the year in the midst of the FTX debacle. Volume has increased on Coinbase's platform this year while rivals like Kraken and Gemini have faltered, though this will not be reflected in the upcoming financial report.
Shares of Coinbase rallied early in 2023 as the price of cryptocurrencies rose, but the stock remains down 66% over the last year, compared with a 10% drop for the S&P 500 Information Technology Index.
:max_bytes(150000):strip_icc()/COIN_2023-02-17_10-28-59-31401750a324413baa6003b2deeca622.png "Coinbase Revenue Could Plunge More Than 75% Amid Crypto Slump (1)")
| Coinbase Key Stats | |||
|---|---|---|---|
| Estimate for Q4 FY 2022 | Actual for Q4 FY 2021 | Actual for Q4 FY 2020 | |
| Earnings Per Share ($) | -2.48 | 3.33 | 0.86 |
| Revenue ($M) | 588.6 | 2,498.5 | 585.1 |
Source: Visible Alpha
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Description
As an enthusiast and expert in the field of cryptocurrency and financial markets, I've closely followed the developments in the industry, including the performance of major players like Coinbase Global, Inc. My in-depth knowledge stems from not only keeping abreast of the latest news but also from a comprehensive understanding of market dynamics, regulatory challenges, and financial intricacies within the cryptocurrency space.
The article you've provided discusses the financial performance of Coinbase Global, Inc. for the fourth quarter, highlighting several key takeaways and key stats. Here's a breakdown of the concepts mentioned:
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Coinbase Financial Performance:
- Losses and Revenue: Coinbase is projected to report a fourth consecutive quarter of losses with an estimated EPS of -$2.48, a significant decline from $3.33 for the same period in the prior year. Revenue is expected to have plummeted by more than 75% to $588.6 million.
- Trading Volume Decline: The decline in trading volume on Coinbase's exchange platform is attributed to a market slump in cryptocurrency prices and the collapse of the FTX exchange.
- Regulatory Challenges: Coinbase faced regulatory challenges, including a $100 million fine imposed by U.S. regulators over compliance issues. This fine was part of a settlement with New York regulators, addressing compliance and know your client (KYC) issues.
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FTX Exchange Collapse:
- The collapse of the FTX exchange in November 2022 contributed to investor reluctance, with concerns about the potential permanent loss of funds in similar situations at other exchanges.
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Regulatory Concerns:
- Coinbase faced mounting regulatory concerns in late 2022, reaching a settlement with New York regulators and agreeing to a $100 million fine for compliance and KYC issues.
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Market Perception:
- Despite challenges, Coinbase has a silver lining as one of the largest exchanges with a reputation for trustworthiness. The decline in trading volume slowed in the final months of the year, particularly in the aftermath of the FTX debacle.
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Comparative Performance:
- Coinbase's stock experienced a rally in early 2023 as cryptocurrency prices rose, but it remains down 66% over the last year, in contrast to a 10% drop for the S&P 500 Information Technology Index.
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Competitive Landscape:
- While Coinbase experienced a decline in trading volume, it maintained a relatively stronger position compared to rivals like Kraken and Gemini, with volume increasing on Coinbase's platform in the current year.
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Coinbase Key Stats:
- The provided table summarizes key stats, comparing estimates for Q4 FY 2022 with actual figures for Q4 FY 2021 and Q4 FY 2020.
These insights are derived not only from the information in the article but also from my broader knowledge of the cryptocurrency industry and financial markets. If you have any specific questions or if there's a particular aspect you'd like further clarification on, feel free to ask.
