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Coinbase significantly beats first quarter thanks to Bitcoin boom and surge in interest in cryptocurrencies
Coinbase reported a major first-quarter result last Thursday, driven by bitcoin’s early-year boom and renewed interest in cryptocurrencies. Meanwhile, bitcoin rebounded slightly after Wednesday’s decline at a key pressure point for institutional investors. Cryptocurrency prices and spot bitcoin ETFs jumped on bitcoin’s advance. Coinbase shares retreated pre-market on Friday.
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CoinBase (CURRENCY) reported earnings of $4.40 per share, up from a loss of 34 cents per share in the same quarter a year earlier. Total revenue jumped to $1.64 billion, up 111% year-over-year and 72% from last quarter.
Analysts polled by FactSet expected Coinbase to report earnings of $1.15 per share as revenue spiked 76% to $1.36 billion.
Transaction revenue increased 187% year-over-year to $1.08 billion, also doubling from the fourth quarter. Consumer transaction revenue increased to $935.2 million, up from $468.9 million in the fourth quarter and $392.2 million in the first quarter last year. Institutional transaction revenue jumped to $85.4 million, up nearly 133% from the fourth quarter and a massive increase from the $22.3 million reported last year.
Revenue from subscriptions and services rose 41% to $511 million, compared to the company’s previous estimates of $410 million to $480 million and analyst estimates of $458 million. The surge in revenue was primarily driven by Coinbase’s blockchain rewards, which more than doubled to $150.9 million.
Coinbase has seen a notable increase in custodial fee revenue, largely due to rising cryptocurrency prices. The exchange also serves as the custodian of most US bitcoin spot ETFs the one launched in January.
Coinbase’s custody fee revenue rose 90% to $32.3 million, compared to FactSet estimates of $31 million. It reported $19.7 million in custodial fee revenue for the fourth quarter ended in December.
Overall trading volume for the quarter was $312 billion, up 104% from the fourth quarter.
The company said it generated more than $300 million in total transaction revenue in April. Coinbase led second-quarter subscriptions and services revenue to range from $525 million to $600 million.
FactSet expects second-quarter earnings of 94 cents a share on revenue growth of 82% to $1.29 billion. Analysts expect subscription and services revenue for the quarter to rise 45% to $489 million.
Mixed response from analysts
Analysts generally said the quarter was very good for Coinbase early Friday, but the company’s outlook generated mixed reviews.
Canaccord in a research note said the quarter underlined the company’s ability to gain market share in hot and cold environments of the cryptocurrency market. The firm raised its price target to $280 from $240 and maintained a buy rating on the shares, the Fly reported.
HC Wainwright said the recent cryptocurrency pullback and regulatory glut could put downward pressure on COIN stock in the near term, but the company is bullish on the medium term following strong increases in revenue and earnings. HC Wainwright raised his price target by $15 to $315 and maintained a buy rating on the stock.
Mizuho and Goldman Sachs were slightly more bearish.
Goldman noted that higher retail take rates, or transaction revenues, drove outperformance in the quarter. However, Goldman said the risk-reward balance for Coinbase shares will largely reflect cryptocurrency price volatility going forward, without a long-term plan in the broader cryptocurrency market. Goldman lowered its price target on Coinbase shares to $255 from $295 and maintained a Neutral rating on the shares.
The strong first-quarter report was not surprising given bitcoin’s rally and cryptocurrency price volatility this year, Mizuho wrote. But the $300 million in April deal revenue implies a second-quarter run rate 16% lower than first-quarter levels. Coinbase’s alternative coin staking services rose to 45% of total revenue from 32% a year ago. However, the SEC sued Coinbase in 2023 over its staking services, claiming they violated securities laws. In late March, a federal judge denied Coinbase’s motion to dismiss the lawsuit. Mizuho maintained an Underweight rating and $145 price target on Coinbase shares.
Coinbase Stock
Coinbase shares fell 5% early Friday. Shares jumped 8.9% in Thursday trading leading up to the results.
COIN shares have fallen about 22% from their March 25 peak of 283.48, which marked their highest level since December 2021. However, Coinbase shares were up nearly 32% in 2024 through Thursday’s close .
Meanwhile, bitcoin was trading at around $59,000 early Friday, after rebounding about 3% on Thursday. The world’s largest cryptocurrency is in another correction that began in late March and continued until the April 19 halving event, digital asset analytics firm 10x Search reported. Bitcoin has fallen nearly 20% from an all-time high of $73,798 on March 14. However, bitcoin has jumped more than 41% this year.
Other cryptocurrency-related stocks rose Thursday as bitcoin rebounded. Digital marathon (MARA) led bitcoin miners with a 6.2% jump on Thursday, followed by Riot control platforms (REVOLT) which increased by 4.9%, and Hut 8 (HUT) with an advance of 2%. CleanSpark (CLSK) rose 1.9%, after five consecutive daily declines.
US spot bitcoin ETFs, including the iShares Bitcoin Trust (IBIT), ARK 21Shares Bitcoin ETF (ARKB) and Grayscale Bitcoin Trust (GBTC), all rose about 4.3% Thursday as bitcoin surged.
You can follow Harrison Miller for more stock news and updates on X/Twitter @IBD_Harrison
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