Coinbase stock fell late Thursday after its earnings report showed a major decline in crypto trading volume. Shares Coinbase (COIN) rallied during trade after the cryptocurrency exchange started offering crypto futures late Wednesday to eligible U.S. retail customers. Bitcoin and cryptocurrency prices faded from overnight highs Thursday morning. Elsewhere, a verdict in the trial of former FTX CEO Sam Bankman-Fried could come as early as this afternoon. X Coinbase Earnings The crypto exchange reported a loss of 1 cent per share, improving from a loss of $2.43 per share last year. Total revenue jumped 14% to $674.1 million, ending a six-quarter streak of double-digit declines. Analysts polled by FactSet expected Coinbase to report a loss of 55 cents per share on 10.4% revenue growth to $651 million. Total transaction revenue declined to $288.6 million, down from $327.1 million and $365.9 million a year ago. FactSet guided transaction revenue at $276 million. Consumer transaction revenue fell to $274.5 million, beating estimates of $256 million. Institutional transaction revenue came in at $14.1 million, below forecasts of $15 million. Subscription and services revenue was $334.4 million, essentially flat quarter-over-quarter and up nearly 59% from 2022. FactSet expected subscription revenue of $323 million. Total trading volume fell to $76 billion in Q3, down from $92 billion in Q2 and $159 billion a year ago. Retail trading volume fell to $11 billion, dropping 21% from last quarter and down nearly 57% from the same period last year. Institutional trading volume declined 17% quarter-over-quarter to $65 billion. Coinbase reported $133 billion in institutional trading volume in 2022. The company guided flat Q4 subscription and service revenue compared to the third quarter and noted it generated $105 million in transaction revenue in October. Crypto Futures Launch The publicly-traded crypto exchange announced Wednesday evening that eligible customers in the U.S. can now trade futures contracts tied to bitcoin and ether, the token for ethereum, through Coinbase Financial Markets. Futures contracts allow investors to speculate on future price movements. The contracts are agreements to buy or sell an asset or security at a specified price and date. Coinbase is also offering leverage trading, which allows investors with borrowed funds to increase their trading position, but comes with higher levels of risk. The new contracts are “specifically sized for retail traders,” Coinbase wrote in the release. Bitcoin futures contracts represent 1/100th of a bitcoin while ether contracts represent 1/10th of ethereum. The company received regulatory approval in August from the National Futures Association, a U.S. Commodity Futures Trading Commission-designated organization. At the time, Coinbase reported the crypto derivatives market represents about 75% of worldwide crypto trading volume. Coinbase Stock, Bitcoin Price Action COIN stock fell more than 4% late Thursday. Shares rallied nearly 9% Thursday prior to the report, marking its fourth straight day of gains. The stock rallied 139% so far in 2023 as the price of bitcoin and other cryptocurrencies rose on a string of regulatory court wins and hopes a spot bitcoin ETF will launch soon. Bitcoin traded shy of $35,000 late Thursday after rallying to $35,938 overnight — its highest level since May. The world’s largest cryptocurrency more than doubled so far in 2023. Ethereum hovered around $1,800 Thursday, down from its Wednesday night peak of $1,874. ETH is trading around its mid-August levels and is up about 50% so far this year. Grayscale Bitcoin Trust (GBTC), which Grayscale Investments hopes to convert into a spot bitcoin ETF, rose modestly Thursday. Bitcoin miner Marathon Digital (MARA) jumped more than 10%. SBF Trial Update Elsewhere, a verdict in the trial of FTX founder Sam Bankman-Fried could come as early as Thursday afternoon. Jury deliberations started Thursday morning after the defense and prosecutors delivered their closing statements Wednesday. Deliberations will resume Monday if a verdict is not reached Thursday. Crypto mogul Bankman-Fried, commonly referred to as SBF, faces several fraud charges for his role in the collapse of the exchange last year. He pleaded not guilty to seven charges including conspiracy, wire and securities fraud in December. He potentially faces up to 115 years in prison if convicted. SBF testified over the course of three days leading up to the closing arguments, including two days of cross-examination. Bankman-Fried repeated previous statements that he wasn’t involved in day-to-day trading decisions at Alameda Research and could not recall many statements made in interviews or his testimony before Congress, the Wall Street Journal reported. He denied that he committed fraud but acknowledged mistakes that hurt investors. The prosecution and Assistant U.S. Attorney Danielle Sassoon attempted to portray his public comments and social media posts as misleading statements or outright lies. The trial included testimony from FTX co-founder and CTO Gary Wang, director of engineering Nishad Singh and Alameda Research CEO Caroline Ellison. The group pleaded guilty and agreed to help prosecutors. Ellison, Bankman-Fried’s on-again, off-again girlfriend, testified that SBF knowingly ordered Alameda Research to commit crimes. You can follow Harrison Miller for more stock news and updates on X/Twitter @IBD_Harrison YOU MAY ALSO LIKE
Coinbase Flips As Key Earnings Metric Spoils Futures Launch Rally; SBF Deliberations Begin – WorldNewsEra
