Coinbase: earnings are going down in Q3

The Coinbase (COIN) stock suffers on the market after the release of quarterly results that report a net loss on earnings of $545 million.

Quarterly results: performance and earnings of Coinbase

Earnings are not exciting for the giant exchange of digital currencies and beyond (NFT, Crypto, other instruments), which slumps dramatically, -50% year-on-year with a loss exceeding $545 million compared to 2021 which instead had generated profits of $400 million. 

Users fared less badly than expected, and the figure pays for the so-called “crypto winter” in which the bear market and the loss of value of major currencies due to the historical phase and macro news caused more superficial users to become disaffected at the expense of monthly subscriptions in particular. 

Bitcoin, the most capitalized cryptocurrency and the one that generally drives the sector, has shared the scepter with Ethereum, which due to its Merge in which it moved from Proof of Work to Proof of Stake has catalyzed some of the interest, but the point is that both have lost a lot of value. 

Since the highs of 2021, BTC has lost more than 70% of its value becoming this time a cause of the debacle of monthly subscriptions that stood at 8.5 million users with MTU transactions during the Q3 running from June to September 2022.

The decline is evident if one takes as a reference the previous quarter where the figure stood at 9 million and is even more acute if one looks at Q1 where 9.2 million MTUs were touched.

Although unsatisfactory, the figure managed to outperform expectations that Street Account analysts placed at $7.84 million. 

Trading volume in the current month stood at $47 billion, a result fairly in line with third-quarter results. 

Retail transactions, however, displeased the CEO and insiders as they stopped at $346.1 million not hitting expectations that were placed at $454.2 million for Q3. 

The drop from $1.02 billion for 2021 turned the noses of many analysts who were expecting quite different figures. 

The stock market reacts badly 

The California-based stock, which is also paying for fierce competition from Binance, which is making inroads in the form of quality offerings, zero commissions, and major acquisitions following the earnings data, has performed decidedly underwhelmingly. 

Having already lost 77.5% of its value from January (listing on Wall Street began) to today, it closed the day at $55.80 registering a -8.09% loss that causes shareholders to lose an additional $5 per share on Thursday alone. 

The after-hours give hope by marking a +2.6%, but according to insiders, this is a slight rebound due to the context and timing of the stock’s release and quarterly reports that do not reward the stock, which enjoys solid fundamentals according to insiders. 

Victim of listing in a bear market period that also involved cryptocurrencies, Coinbase lost more than three-quarters of its value in 2022. 

One of the avenues taken as a countermeasure by the California company was to cut staff beyond expectations, which was 10%.

Coinbase said it is cutting as much as 18% of permanent jobs amounting to about 1,000 workers in America alone. 

In a note released after the release of the data, Coinbase paints a picture of the situation trying to justify the results and plotting the road to a possible recovery i.e. reducing operating expenses and offering an ever more complete and faster offer and quality of service to its users. 

Another point to press on is a subscription campaign to bring back above nine million customers. 

In the note the company stated:

“Transaction revenues were significantly impacted by strong headwinds in the macroeconomic and cryptocurrency market, as well as the volume of trading that moved overseas. The third quarter was a mixed quarter for Coinbase. Transaction revenue was a mixed quarter for Coinbase. significantly impacted by strong headwinds at the macroeconomic and cryptocurrency market level, as well as the volume of trade that has moved overseas. Even though headwinds are beyond our control, we continue to focus on the factors under our control : narrow the focus on the product to deliver extraordinary customer experiences and reduce our operating expenses.”