The largest US cryptocurrency exchange’s shares rose as Coinbase Global Inc. reported a profit for the first time in two years as a result of a fourth-quarter surge in digital asset markets that increased trading revenue.
Revenue surged by 51% to $953.8 million, exceeding the $826 million average estimate provided by Bloomberg’s panel of analysts. In a letter to shareholders on Thursday, Coinbase stated that its net income for the previous year was $273 million, or $1.04 per share, as opposed to a loss of $557 million, or $2.46, the previous year. Analysts predicted that there would be a loss.
While institutional transaction revenue more than doubled to $36.7 million from the previous quarter, consumer transaction revenue increased to $492.5 million, nearly twice as much as it did in the third quarter.
According to Owen Lau, an Oppenheimer & Co. analyst with a “outperform” rating on the stock, Coinbase was formerly thought to be an unprofitable company. This quarter, however, could begin to change that perception. Seeing if Coinbase can continue to turn a profit for the entire year is, in my opinion, the next step.
Wall Street has been keeping an eye out for indications from Coinbase that some of its retail revenue may be at risk due to the plethora of recently established US exchange-traded funds making direct investments in Bitcoin. Retail users generate more revenue for the exchange than do institutions.
Over 15% was gained by Coinbase’s shares in after-hours trading. Last year, the stock increased by nearly five times. following an 86% decline in 2022.
The letter from Coinbase explained that the sharp spike in cryptocurrency volatility in the fourth quarter was due to “excitement” surrounding the approval of Bitcoin spot ETFs and general expectations about improving macro conditions in 2024.
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