However, Coinbase Q4 Earnings Look Much Better Than Expected. But there’s a Catch
Coinbase Earnings – The largest cryptocurrency exchange in America, Coinbase Global Inc., reported a decrease of revenue for the fourth quarter. This was less than experts expected. The exchange’s transaction-based revenue was $322 million, compared to $590 million in third quarter.
Coinbase’s positive Q4 earnings
The fourth quarter revenue was $629.1million, which is significantly higher than analysts’ average estimate of $581 million. It had revenues of $2.5billion in the same period last year. The quarter’s net loss was $557 million due to lower trading volumes than expected. The company expects its subscriptions and services income to fall between $300 million-$325 million in the first quarter.
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The company’s current focus is on subscriptions and services. Their earnings increased by 34% over the previous quarter to $283 million in fourth quarter. Subscriptions and services accounted for roughly half of the company’s total revenue in the fourth quarter. This was mainly due to $162.2 million in interest income.
Coinbase was quoted in a letter addressed to investors as saying:
We expect 2023 will be a year of regulatory focus. We believe our solid foundation will make us a net benefit of this new environment.
Coinbase is facing growing concerns
According to reports, the country’s crypto market share has been declining, falling from 5.9% in November, to 4.1% in February. This loss in market share has been ongoing for some time. The report claims Binance has increased its market share to 60% in February, despite receiving significant regulatory windfalls.
The United States government has taken a number of regulatory actions in recent weeks. These include the Securities and Exchange Commission’s (SEC’s) decision to close Kraken’s staking services in the country and the NYDFS order to sue Paxos because it sold BUSD as an unregistered security. This has created uncertainty for Coinbase. Coinbase is the founder partner for the USDC stablecoin and also operates its own retail staking company.
Coinbase shares rose by around 1.76% to $63.16 during Tuesday’s after-hours trades. Coinbase’s share prices have risen by 78% in 2023, in line with the rise in Bitcoin (BTC) prices. The share price is still down 67% compared to the previous year.
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