Coinbase Q4 Earnings Looks Better Than Expected But There’s A Catch

Coinbase Earnings: The largest cryptocurrency exchange in the United States, Coinbase Global Inc., announced a decrease in revenue for the fourth quarter that was less severe than what experts had anticipated. Compared to $590 million in the third quarter, the exchange’s transaction-based revenue came in at $322 million.

Coinbase’s Positive Q4 Earnings

The revenue for the fourth quarter came in at $629.1 million, which is significantly more than the average expectation of $581 million from analysts. For the same time period the previous year, it had revenues of $2.5 billion. The trading volume was lower than expected, which contributed to the net loss of $557 million for the quarter. The company anticipates that its income from subscriptions and services will fall between $300 million and $325 million for the first quarter.

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Earnings from subscriptions and services, which the company is currently focusing on, increased by 34% from the previous quarter to a total of $283 million in the fourth quarter. In the fourth quarter, subscriptions and services were responsible for approximately half of the company’s total revenue. This was mostly due to interest income, which totaled $162.2 million.

In a letter penned to investors, Coinbase was quoted as saying:

We expect 2023 to be a year of regulatory focus and we believe our strong foundation will make us a net beneficiary of this new environment.

Growing Concerns For Coinbase

According to reports, its crypto market share has been falling, dropping from 5.9% in November to 4.1% in February. This loss of market share has been going on for some time. The report claims that Binance has increased its share in the market, reaching about 60% in February, even though it also encountered significant windfalls from regulators.

Regulatory actions taken by the United States government in recent weeks, such as the Securities and Exchange Commission’s (SEC) decision to shut down Kraken’s staking service in the country and the NYDFS’ order to sue Paxos for selling BUSD as an unregistered security, have created uncertainty for Coinbase, which operates its own retail staking business and is a co-founder of a stablecoin called USDC along with Circle.

During Tuesday’s after-hours trading, shares of Coinbase increased by around 1.76% to $63.16. Coinbase’s share price has increased by a massive proportion thus far in 2023, up 78%, paralleling the rise in the price of Bitcoin (BTC). However, the share price is still down 67% over the course of the previous year.

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