Coinbase swings to quarterly loss as crypto winter hits trading volume
7:17 pm Tuesday, February 21st, 2023
By Manya Saini
(Reuters) -Coinbase Global Inc reported a fourth-quarter loss on Tuesday, as trading volume at the cryptocurrency exchange came under pressure from an industry-wide downturn triggered by a string of high-profile bankruptcies.
The digital assets market suffered from dour sentiment over the last year, but the biggest blow to the sector came from the bankruptcy of Sam Bankman-Fried’s major crypto exchange FTX in November.
“In the wake of FTX and other crypto company failures, we have seen increased regulatory scrutiny,” Chief Executive Brian Armstrong said on a call with analysts but added the development will ultimately benefit Coinbase.
Amid the market downturn, trading volume at the crypto exchange plunged to $145 billion in the fourth quarter, compared with $547 billion a year earlier.
Retail traders also pulled back significantly, with their trading volume in the quarter plummeting nearly 89% to $20 billion.
One bright spot was subscription and services revenue, which rose about 33% to $282.8 million in the fourth quarter, benefiting from hefty interest rate hikes.
Shares in Coinbase were up marginally in volatile trading after the bell.
The crypto exchange forecast subscription and services revenue in the first quarter between $300 million and $325 million, above Wall Street estimates of about $285.7 million, according to Refinitiv data.
“I think it is a pretty good report with encouraging outlook. We will see how the stock settles,” Oppenheimer analyst Owen Lau told Reuters, adding the guidance was supported by expense control and improving revenue trend.
The company reported net revenue of $605 million in the quarter, compared with $2.49 billion a year earlier.
Coinbase reported a net loss of $557 million in the three months ended Dec. 31, compared with a profit of $840 million a year earlier.
(Reporting by Manya Saini in Bengaluru; Editing by Krishna Chandra Eluri)
