Coinbase: stock and earnings of crypto exchange heading into Q3
Coinbase: stock and earnings of crypto exchange heading into Q3
Crypto

Coinbase: stock and earnings of crypto exchange heading into Q3

By Amelia Tomasicchio - 2 Nov 2022

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On Thursday, 3 November, the results of Coinbase Global’s (Nasdaq: COIN) performance and thus eventual earnings regarding the third quarter of 2022 will finally be known.

Analysts are anxiously awaiting this date after the first two quarters of the year have been negative.

Particularly attracting analysts’ attention is the derivatives and staking sector.

Coinbase points to derivatives to boost earnings

The US exchange some time ago announced that it had hired Usman Naeem, formerly of Goldman Sachs, to handle crypto derivatives sales. 

His role is head of global derivatives sales and agency trading in the London office. Naeem will work alongside Brett Tejpaul, head of institutional, and Coinbase’s vice president of institutional products, Greg Tusar.

Coinbase is currently ranked second only behind Binance in spot volumes, but without a major presence in the derivatives market. 

Coinbase had already entered the crypto derivatives sector in early 2022 through the acquisition of the Commodity Futures Trading Commission (CFTC)-regulated FairX platform.

The crypto exchange and the earnings of COIN shares on the exchange

Wall Street expects Coinbase’s third-quarter revenue to be $649 million, just half of last year’s, whereas it is expected to record a loss of $213 million, thus a significant drop from the $618 million profit recorded in 2021.

Coinbase is thus expected to record a net loss of $559 million, compared to last year’s profit of $406 million.

coinbase mtu chart
The chart shows the trend of Coinbase’s MTUs

Coinbase had a very difficult second quarter of 2022, with trading volumes and transaction revenues down 30% and 35%, respectively, from the first quarter. 

In fact, in its letter to shareholders published last August, Coinbase had stated that cryptocurrency market capitalization declined by $1.3 trillion, or about 60%, between April and June, and this obviously had a major impact on the exchange’s shares and earnings.

Given this decline in the company’s profits, COIN’s net loss on the exchange is also expected to be $540 million – about half of the second quarter decline -but Coinbase reduced its expenses in the quarter by about 30%.

In June, Coinbase also said it plans to cut about 18% of its workforce, joining a number of major industry players. 

Coinbase’s stock price has fallen about 74% year-to-date, and as of yesterday, 1 November, is down nearly 5%.

Despite the good news of Google also accepting cryptocurrency payments through a partnership with Coinbase, COIN’s stock market performance is not improving as a result.

The latest news regarding Coinbase

In late October, Coinbase decided to support Grayscale’s lawsuit over the launch of its spot Bitcoin ETF. The request had been rejected by the SEC and so Grayscale had decided to take legal action, garnering many endorsements from various players in the crypto world.

In early October, the company obtained approval in principle from the Monetary Authority of Singapore (MAS) to provide digital payment token (DPT) services in the island state.

In late September, Coinbase also updated its exchange fees to account for changes in global cryptocurrency trading volumes, and asset prices.

Amelia Tomasicchio

As expert in digital marketing, Amelia began working in the fintech sector in 2014 after writing her thesis on Bitcoin technology. Previously author for several international crypto-related magazines and CMO at Eidoo. She is now the co-founder and editor-in-chief of The Cryptonomist. She is also a marketing teacher at Digital Coach in Milan and she is writing a book about NFTs for the Italian publishing house Mondadori, while she is also helping artists and company to entering in the sector.

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