Coinbase shares tumble as Q3 financials disappoint
Coinbase shares are down by 8.5 per cent today after third quarter revenue came in beneath industry estimates.
The Nasdaq-listed crypto exchange reported revenue of $1.2bn in Q3, a sharp drop compared to the $2bn made in the previous three months and well below estimates of $1.6bn predicted by Factset. Sluggish market conditions over Summer put off investors with retail trading volumes falling by 36 per cent between quarters while institutional investment declined by 26 per cent.
In a letter to stakeholders, Coinbase wrote “as our year-to-date results have clearly demonstrated our business is volatile”.
“Coinbase is not a quarter-to-quarter investment, but rather a longterm investment in the growth of the cryptoeconomy and our ability to serve users through our products and services. We encourage our investors to take this point of view,” the statement continued.
In the second quarter the company’s results were lifted by bumper transaction volume driven by favourable market conditions, high levels of volatility as a result of a major market correction, and increasing numbers of retail investors pouring into the crypto space.
Between April and June Coinbase reported a year on year increase to its active user base of 487 per cent, from 1.5 to 8.8m. While Coinbase’s community of active monthly users is still streaks ahead of where it was a year ago it contracted by 16 per cent to stand at 7.4m in the latest quarter while trade volume fell from a record $462bn in Q2 to $327bn.
Despite the dip to revenue Coinbase plans to “invest aggressively” in strengthening its systems and improving user experience in the months ahead with the company growing 27 per cent in Q3 after taking on 600 new employees.
Commenting on the “bigger picture” Coinbase said it believes that crypto adoption is mirroring the scale of internet adoption in the 1990s offering an enormous opportunity for innovation.
Shares closed at $357.39 yesterday evening, but tumbled to lows $320 today as the company’s revenue dip spooked investors.