coincodex.com
Key highlights:
- Coinbase's shares took a dip after the company shared its Q3 results
- The exchange underperformed expectations in terms of revenues and profits
- Coinbase says that it should not be viewed as a quarter-to-quarter investment due to the short-term unpredictability of the cryptocurrency market
Coinbase's shares dip after underwhelming Q3 results
United States-based cryptocurrency exchange Coinbase has seen its shares dip after investors were underwhelmed by the company’s Q3 figures. Coinbase stock, which was trading at $357 at Tuesday’s market close, dropped down to $327 at market open. The price has since recovered slightly to about $341 per share.
CNBC cites Refinitiv data, which says that the consensus estimate for Coinbase’s Q3 revenue was $1.57 billion. According to Coinbase’s Q3 shareholder letter, the company generated $1.31 billion in revenue during the quarter (missing the consensus estimate by about 18%). Coinbase’s monthly transacting users (MTUs) fell from 8.8 million in Q2 to 7.4 million in Q3.
Coinbase’s net income also took a hit in Q3, falling to $406 million compared to the $1.6 billion figure the exchange recorded in the previous quarter.
As a company that exclusively operates in the cryptocurrency space, Coinbase’s performance as a company is significantly influenced by conditions in the cryptocurrency market. The start of Q3 was particularly weak for the cryptocurrency market, as the price of Bitcoin declined all the way down to $30,000 to end the big price correction that started in May.
While Coinbase says that it felt the impact of the market conditions at the start of Q3, the exchange noted that its trading volume in Q3 took a smaller hit than the decline that was experienced by the industry as a whole:
“While we entered Q3 with softer crypto market conditions, driven by low volatility and declining crypto asset prices, market conditions improved meaningfully later in the quarter which we have continued to see into early Q4. This backdrop led to global crypto spot trading volumes declining
37% in Q3 as compared to Q2, however, Coinbase outperformed the market with total trading volumes of $327 billion, a 29% decline in the same period.”
In the shareholder letter, Coinbase stated that it shouldn’t be viewed as a quarter-to-quarter investment, and instead encouraged investors to take a more long-term view. Despite this, the company said that it expects to see its monthly transacting users and total trading volume to increase in Q4 2021.