coin news,Understanding Coinbase’s Recent Performance
Understanding Coinbase’s Recent Performance
As the crypto market has experienced a downturn, Coinbase, one of the leading crypto exchanges, has recently announced its Q3 earnings, which fell short of expectations. Despite the company’s optimism about a more active trading environment in the fourth quarter, the decline in Ethereum prices in October may offset the growth in subscription and services business.
| Revenue | Change | Profit | EPS |
|---|---|---|---|
| $12.1 billion | 79% YoY, 17% QoQ | $7.545 million | $0.28 |
Coinbase’s total revenue for the third quarter was $12.1 billion, a 79% increase year-over-year but a 17% decrease quarter-over-quarter. The company’s net profit was $7.545 million, compared to a net loss of $2.265 million in the same period last year. The EPS of $0.28 was below the average analyst estimate of $0.40.
Coinbase’s Business Segments
Breaking down the revenue by business segments, trading revenue was $5.73 billion, up 98% year-over-year but down 27% quarter-over-quarter. Retail trading revenue was $4.83 billion, while institutional trading revenue was $55.3 million. Subscription and services revenue was $5.56 billion, up 66% year-over-year but down 7% quarter-over-quarter.
Stablecoin Revenue and Visa Partnership
Despite the overall decline in trading revenue, Coinbase’s stablecoin revenue reached $2.47 billion, up 43% year-over-year and 3% quarter-over-quarter. This growth was attributed to the increasing popularity of stablecoins, which are considered a key application in the crypto space. Coinbase also announced a 50/50 revenue-sharing agreement with Circle to share the interest income from supporting USD Coin (USDC), the second-largest dollar-backed stablecoin.
In addition, Coinbase has partnered with Visa to offer real-time purchase of cryptocurrencies through eligible Visa debit cards. This partnership allows Visa customers in the U.S. and the EU to transfer funds to their Coinbase accounts, sometimes instantly.
BTC Price Surge and Trump’s Influence
On the heels of Bitcoin’s surge to a new all-time high, Coinbase and other Bitcoin-related stocks experienced a significant boost. Investors believe that the record-breaking trend of Bitcoin could continue, especially as more crypto-friendly candidates win in the U.S. presidential election. Donald Trump, who promised to make the U.S. the global crypto hub during his campaign, has been a significant influence on the crypto market.
Legislation and Regulatory Clarity
Coinbase’s policy director, Faryar Shirzad, has expressed optimism about the passage of crypto-friendly legislation under a Trump presidency. With the Republican Party gaining control of both houses of Congress, the approval process for such legislation is expected to be smoother. Two bills, the “21st Century Financial Innovation and Technology Act” and the “Payment Stablecoin Clarity Act,” are currently seeking congressional approval.
Expanding Payment Services and Acquisitions
Not content with just crypto trading, Coinbase is expanding its payment services and considering more acquisitions. The company recently acquired the team of payment startup Utopia Labs and may acquire more payment-related businesses to expand its functionality. Coinbase is also considering charging fees for certain payment services within its Coinbase Wallet app.
Coinbase has been actively entering the payment space, believing that it can offer more features than competitors like Block’s Cash App and Strike, as well as traditional money transfer services. The company has developed a universal app that allows users to trade and hold cryptocurrencies, as well as make payments. If successful, payment services could account for 10% of Coinbase’s revenue within five years.
