Coinbase Global reported its first quarterly profit since 2021 on robust trading volumes fueled by increasing interest in bitcoin, sending its shares up nearly 13% after the bell
Coinbase Global (COIN.O), which opened a new tab, recorded its first quarterly profit since 2021 on strong trading volumes driven by renewed interest in cryptocurrency, driving its shares up nearly 13% after the bell.
The US Securities and Exchange Commission’s (SEC) approval of the first spot bitcoin exchange-traded funds (ETFs) has reignited investor interest in cryptocurrency.
While the ETFs were only approved in January, expectations of a positive judgment by the SEC sent bitcoin’s price up 57% in the final three months of 2023.
This resulted in a 64% increase in transaction revenue for cryptocurrency exchange Coinbase to $529.3 million in Q4.
“Results this quarter were exceptional as they far exceeded both our expectations and Street consensus,” said Michael Elliott, equity research analyst with CFRA Research.
The cryptocurrency exchange now predicts a solid first quarter for its subscription and services unit, which includes revenues other than trading.
It expects revenue from the unit to range between $410 million and $480 million, which is higher than the LSEG projection of $356.22 million.
Revenue from the unit increased by roughly 33% in the fourth quarter to $375.4 million, with stablecoin revenue—the interest Coinbase earns via its collaboration with fintech startup Circle—accounting for the majority of the increase.
Circle creates the USD Coin (USDC) stablecoin, which it jointly manages alongside Coinbase. The interest on USDC reserves is a significant source of revenue for Coinbase, which has been able to increase its revenues as a result of the Federal Reserve’s interest rate increases.
Overall, the firm reported a profit of $273.4 million, or $1.04 per share, in the three months ended December 31, compared to a loss of $557 million, or $2.46 per share, the year before. According to LSEG statistics, analysts predicted a one-cent loss per share.
Elliott expressed long-term fears that “the spot ETFs may lead to more investors looking for crypto exposure off the Coinbase platform.”
But the corporation dismissed such concerns.
“ETFs have just been net positive for the industry and additive to Coinbase,” stated CFO Alesia Haas.
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