COIN Stock Shoots 8% As Coinbase Announces Strong Q3 Numbers

The Coinbase (NASDAQ: COIN) stock gained 8% during Thursday’s trading session as the crypto exchange reported better-than-expected Q3 numbers. The COIN stock ended Thursday’s trading at $84.60 extending its 2023 gains to more than 150%.

Coinbase’s Q3 Numbers

Coinbase exceeded analysts’ expectations by announcing third-quarter revenue of $674.1 million, marking a 4.7% decrease from the previous quarter but a 14.2% increase from the corresponding period last year.

FactSet data revealed that analysts had anticipated quarterly revenue of $651 million. Coinbase reported a net loss of $2 million for the quarter, contrasting with a loss of $545 million during the same period the previous year. In a letter to shareholders, the company said:

“Q3 was a strong quarter for Coinbase. While we have generated a net loss through Q3, we are on track to deliver meaningful positive Adjusted EBITDA for 2023, reflecting the direction we set at the beginning of the year to be a company that can generate Adjusted EBITDA in all market conditions.”

Coinbase stated that in the third quarter, they acquired new licenses to expand into new markets and introduce new products. They also emphasized their ongoing efforts to enhance regulatory clarity within the United States.

Furthermore, Coinbase expressed optimism of achieving significant positive Adjusted EBITDA for the entire year of 2023. This represents a revision of their previous target, which aimed to improve full-year 2023 Adjusted EBITDA in absolute dollar terms compared to the full-year 2022 figures.

Interestingly, during the third quarter, Coinbase also generated $172 million in USDC stablecoin interest income, up from $151 million in the previous quarter. Coinbase is also expecting that the tokenization of financial assets like US Treasury and bonds, to accelerate over the next year.

Trading Volumes Remain a Concern

Amid the high handed regulatory action by the US SEC, declining trading volumes remain a major concern for Coinbase. The trading volumes on Coinbase during Q3 dropped to $76 billion, from $159 billion quarter over quarter. To spur up trading volumes, Coinbase has also debuted BTC and ETH futures for retail traders in the US.

Coinbase also saw a decrease in total transaction revenue, reporting $288.6 million in the third quarter, down from $365.9 million for the same period in 2022. Additionally, this quarter’s transaction revenue was lower than the previous quarter.

The company attributed these declines to a substantial reduction in market volatility, which negatively impacted their revenue. Coinbase stated that crypto asset volatility, a significant revenue driver, had steadily decreased in the third quarter and reached its lowest level since 2016.

Regarding future expectations, the company anticipates that fourth-quarter transaction revenues will remain relatively stable when compared to the third quarter, as they generated approximately $105 million in transaction revenue for the month of October.