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Benefiting from the rise in cryptocurrency prices and increased interest income from stablecoins, Coinbase Global achieved its first quarterly profit in two years.
According to financial report data, Coinbase achieved a net profit of $273 million (earning $1.04 per share) in the fourth quarter, reversing the loss of $557 million in the same period last year, marking the first quarterly profit in two years for Coinbase.
According to a FactSet survey, Coinbase's actual performance significantly exceeded analysts' expectations of earnings per share of $0.02 and sales revenue of $826 million. Coinbase's revenue increased from $629 million a year ago to $954 million.
Following the release of the financial report, Coinbase's stock price surged by 12% in after-hours trading on Thursday, reaching $185. In pre-market trading on Friday, Coinbase rose by over 12%. In the short term, Coinbase's stock has fallen by about 5% year-to-date (compared to the S&P 500 index, which has risen by over 5%). Over the past 12 months, Coinbase's stock price has skyrocketed by 140% (compared to a gain of approximately 21% for the S&P 500 index).
Management at Coinbase mentioned in a shareholder letter that the increased risk appetite in the market, driven by the volatility of the cryptocurrency market, the approval of Bitcoin spot ETFs, and optimistic expectations for future macroeconomic improvements, collectively contributed to the growth of Coinbase's performance.
Increased risk appetite, leading to increased trading activity
Coinbase mentioned some key drivers of the company's performance growth:
1) Increased volatility of cryptocurrency assets: Management at Coinbase mentioned in the shareholder letter that they observed a significant increase in the volatility of cryptocurrency assets, similar to what occurred in early 2023. Increased volatility in cryptocurrency prices typically leads to increased trading volumes, as investors seek to buy low and sell high, which is beneficial for trading platforms like Coinbase, enabling them to earn more trading fees.
Public data shows that Coinbase's total trading volume increased from $145 billion a year ago to $154 billion in the fourth quarter. Moreover, December saw $672 billion, and January's spot data was $757 billion, with monthly trading volume showing a sequential increase. Analysts believe that as of February 13th, Coinbase's trading revenue was $320 million, $529 million in the fourth quarter, and linearly inferring the first quarter to be $650 million, an increase of $120 million month-over-month, representing a 22% increase.
2) Approval of Bitcoin spot ETFs: Coinbase pointed out that one of the main reasons for its performance growth was the news of the approval of Bitcoin spot ETFs. The approval of Bitcoin spot ETFs is seen as an important step for the cryptocurrency market towards the mainstream financial world, as it provides ordinary investors with a relatively simple and safe way to invest in Bitcoin. Such news typically increases interest and investment in the cryptocurrency market, driving up trading volumes and prices.
Analysts believe that the approval of ETFs has a positive impact on Coinbase, including increased trading volume and custody income. Negative impacts include some users potentially shifting to the ETF market and fee pressure, but these impacts are considered minor.
3) Expectations for improved macroeconomic conditions: Coinbase also mentioned that the widespread expectation for improved macroeconomic conditions in 2024 also contributed to increased risk appetite activity in the capital markets. When investors anticipate economic improvement, they may be more willing to take risks and seek higher returns, leading to increased investment activity, particularly in the cryptocurrency market, which is seen as high-risk but with high potential returns. Coinbase stated that part of the reason for its profit and revenue growth is the increased risk appetite in the market, which has led to increased activity in the cryptocurrency market, where trading activity tends to increase.
Looking ahead, Coinbase is confident
The trading platform is confident in its current status and future prospects.
In terms of performance guidance, the company expects subscription and service revenue to be between $410 million and $480 million in the first quarter. The company also revealed that as of Tuesday, its trading revenue was approximately $320 million, and the company expects to continue to receive stable income streams from its services and trading fees.
Coinbase expects research and development expenses and management expenses to increase to $600 million to $650 million in the first quarter, as Coinbase increases technical and administrative expenses to support long-term growth.
In terms of self-assessment, Coinbase wrote in its letter to shareholders:
"Today's Coinbase is fundamentally a stronger company than a year ago, and we are financially sound, able to seize future opportunities."
In addition, Coinbase is actively involved in ZZ and social activities to promote wider acceptance and support for cryptocurrencies.
Regarding compliance, Coinbase stated that regulatory uncertainty has been a major challenge for companies' operational decisions and investor confidence in the cryptocurrency industry. Coinbase mentioned that it is actively engaged in conversations with regulatory agencies on compliance matters, aiming to promote a clearer and more friendly regulatory environment. By working with regulatory agencies, Coinbase is committed to ensuring that its platform complies with regulatory requirements worldwide and provides users with a safe and compliant trading environment.
At the same time, Coinbase also supports the "Stand With Crypto" effort, which aims to attract 1 million cryptocurrency advocates to help promote crypto-friendly policies.
Additionally, Coinbase has made significant progress in product innovation, launching innovative products such as the Coinbase International Exchange, derivatives products for the Coinbase financial market, and Base, and has obtained licenses or launched operations in six new markets.
In terms of institutionalization, in the United States, 8 out of 11 BTC spot ETFs have chosen Coinbase as their custody broker, and 33% of the world's largest 100 hedge funds have chosen to go live on Coinbase.
Analysts believe that the better-than-expected financial report helps alleviate market concerns about Coinbase, and Coinbase's coverage and recognition by institutions help expand its ETF custody and expand its business through compliance around the world, which is a guarantee for its future stable development. |
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Post time 22-2-2024 07:49:59