Coinbase Faces Mixed Wall Street Reactions After Earnings Miss and Acquisition
Wall Street analysts have given mixed reactions to Coinbase's (https://holder.io/coins/coin/) first-quarter earnings, which missed expectations. Key points include:
- Revenue dropped 12% quarter-over-quarter to $2.03 billion; transaction revenue fell by nearly 19% to $1.3 billion.
- Analysts from Keefe, Bruyette & Woods and JPMorgan have lowered second-quarter and full-year revenue projections due to declining fee rates and reduced institutional activity.
- Institutional volume revenue decreased by 30% quarter-over-quarter, with fees dropping from 4.1 to 3.1 basis points.
- Retail trading remained stable. The acquisition of Deribit for $2.9 billion is seen as a significant move, focusing on the futures market.
- Subscription and services revenue increased 9% to $698 million, driven by stablecoin adoption.
- USDC balances surged 50% to $12.3 billion. Average user balances tripled since June 2023.
- Coinbase plans to enhance its “Coinbase as a service” model, aiming to stabilize revenue through infrastructure offerings.
- Analysts highlighted macroeconomic risks affecting trading volumes and noted setbacks related to regulatory clarity following the blocking of the GENIUS Act.
- Despite short-term challenges, analysts remain optimistic about Coinbase's long-term prospects due to its product diversity and market position.