Shares of cryptocurrency exchange Coinbase soared 13% Friday in U.S. premarket trading after the company reported its first profit in two years.
Coinbase, the largest U.S. venue for buying and selling cryptocurrencies, said that net income totalled $273 million in the fourth quarter.
Coinbase said Thursday that its net revenue was $905 million in the fourth quarter of 2023, up nearly 50% from $605 million in the same period of the previous year.
Cryptocurrencies saw a huge amount of interest from investors in the fourth quarter of last year, following news of the U.S. Securities and Exchange Commission approving the first spot bitcoin exchange-traded funds (ETFs) — for bitcoin.
Bitcoin ETFs enable retail investors to access the cryptocurrency as a share that’s traded on a regulated exchange without directly exposing them to the underlying asset.
The news has driven heightened demand for cryptocurrencies due to anticipation that it could drive heightened interest from retail investors.
Coinbase said that transaction revenues were the primary driver of revenues for the last quarter of 2023, adding that subscription and services revenue remained relatively flat.
Coinbase said Thursday that its net revenue was $905 million in the fourth quarter of 2023, up nearly 50% from $605 million in the same period of the previous year.
Cryptocurrencies saw a huge amount of interest from investors in the fourth quarter of last year, following news of the U.S. Securities and Exchange Commission approving the first spot bitcoin exchange-traded funds (ETFs) — for bitcoin.
Bitcoin ETFs enable retail investors to access the cryptocurrency as a share that's traded on a regulated exchange without directly exposing them to the underlying asset.
The news has driven heightened demand for cryptocurrencies due to anticipation that it could drive heightened interest from retail investors.
By the numbers: Coinbase's stock jumped over 13% in after-hours trading following the results Thursday.
- The company reported a $273 million profit in the fourth quarter. For the full year of 2023, it earned $95 million on $3.1 billion in revenue. In 2022, it booked a $2.6 billion loss.
- Revenue was $954 million in Q4, up 41% from the prior three months.
- So far in Q1 2024, through Feb. 13, it's seen $320 million in transaction revenue.
- Coinbase largely makes money by charging its customers fees for trading cryptocurrency, so analysts expected the surge in crypto prices in the fourth quarter to translate to higher trading volume.
- That's, in part, why Coinbase is considered a bitcoin-proxy, often moving with the world's largest digital asset. (BTC rose more than 50% last quarter.)
- It rolled out an international derivatives exchange and has been getting licensed to expand its geographical footprint.
- Coinbase cut 20% of its workforce, or 950 people, the day spot bitcoin ETFs were approved — its third round of layoffs since last year, which Armstrong said was a "difficult decision" aimed at reducing expenses.
- Coinbase is a major donor to super pac Fairshake, as well as associated pacs, and lengthy television ads about how crypto changes the future.
Be smart: Earnings reports give investors a sense of how the company is doing, but also where it's going.
What we're watching: The company has been trying to diversify its business as ever-changing crypto seasons showed up in its financials, to the chagrin of its shareholders.
Flashback: In late August, it re-cut its deal with stablecoin issuer Circle, now earning a pro rata portion of income earned on USDC reserves based on the amount of USDC held on its platform, as well as from USDC distribution after certain expenses.
Our thought bubble: The company's also been spending a lot in a bid to influence public policy. Read Continue
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