Coinbase stock slips towards all-time lows as crypto trading slows

Coinbase Global Inc. posted a loss last quarter and posted lower-than-expected revenue as it lost 2.2 million crypto traders from its platform, citing the impact of lower crypto asset volatility and prices.

Shares of Coinbase COIN,
They are down 16% in after-hours trading on Tuesday after falling about 13% in the regular session. They traded at lower prices than any regular trading session since the company went public just over a year ago.

Coinbase’s net revenue for the first quarter fell to $1.17 billion from $1.60 billion a year earlier, while analysts had expected $1.50 billion.

The drop in sales came as volumes slowed. Coinbase reported trading volume of $309 billion for its March quarter, compared to $547 billion in the December quarter and $335 billion in the March quarter last year. Retail trade volume was $74 billion compared to $177 billion in the December quarter and $120 billion a year earlier.

The company had 9.2 million users with monthly transactions, compared to 11.4 million in the December quarter.

“We believe these market conditions will not last and we remain focused on the long term. In fact, our investment in our business is particularly important now – these periods of low volatility can present an opportunity to focus more intensely on product development (as opposed to peak periods when we are more focused on meeting high demand).” the company states in its shareholder letter.

The company posted a net loss of $430 million, or $1.98 per share, for the first quarter, compared to net income of $388 million, or $3.05 per share, in the year-ago quarter. Analysts followed by FactSet were expecting a loss of 1 cent per share on a GAAP basis.

Coinbase had previously committed to making 2022 an “investment year,” and the company continues to prioritize capital spending amid a tougher environment for business.

“We’re very confident that we can prioritize profitability over reinvesting in the business,” Chief Financial Officer Alesia Haas said on Coinbase’s conference call, but the company sees opportunities to move into areas such as non-fungible tokens (NFTs) and international growth invest.

“We could have done more of these in a row, we could have slowed down and focused on profitability, but we have the resources,” she continued. “We have a disciplined approach to guiding our business through ups and downs.”

Coinbase announced that 24% of its total volume was concentrated in Bitcoin BTCUSD last quarter,
along with 21% in Ethereum ETHUSD,
and the rest in other assets. This contrasts with concentrations of 16% each for Bitcoin and Ethereum in the December quarter.

While acknowledging the “market softness,” Coinbase said it saw encouraging trends, such as: B. the increasing adoption of non-investment products. About 5 million Coinbase users transacting monthly engaged in a non-investment product during the quarter, with staking being the most popular option.

“Our thesis of moving away from a trading platform to enabling the entire crypto economy and the primary financial account for people is really starting to work,” Chief Executive Brian Armstrong said on the conference call.

The report follows a rough slide in Coinbase shares, which have lost 55% over the past month as the S&P 500 SPX,
has lost 11%. The company announced that it saw “a sustained decline in both crypto asset volatility and crypto asset prices” in April.

For Q2, Coinbase expects monthly user transactions and total trading volume to be lower than Q1. Coinbase also expects subscription and service revenue to be similar or slightly lower than what the company saw in the first quarter. Coinbase stock slips towards all-time lows as crypto trading slows

Brian Lowry

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