Coinbase Losing Strength, Both Revenue and Users Plummet... Stock Price Drops 28%

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] Coinbase, the largest cryptocurrency exchange in the United States, saw its stock price plunge nearly 30% after reporting significantly lower-than-expected results due to a sharp decline in users and trading volume in the first quarter (January-March) of this year.

According to Bloomberg and other sources on the 10th (local time), Coinbase announced in its earnings report that it recorded revenue of $1.17 billion (approximately 1.5 trillion KRW) in the first quarter of this year, down 27% compared to the same period last year. This figure fell far short of market expectations of $1.48 billion. The net loss was $430 million in the first quarter of this year.

While Coinbase saw a significant increase in users and trading volume in the fourth quarter of last year, both sharply declined this year. The number of monthly active trading users was 9.2 million in the first quarter, an increase of more than 50% compared to the same period last year, but nearly 20% lower than in the fourth quarter of last year. Trading volume decreased by 7.8% year-over-year and 43.5% quarter-over-quarter.

The deterioration in Coinbase’s performance is attributed to the significant decline in cryptocurrency prices, including Bitcoin, since November last year. Owen Lau, an analyst at Oppenheimer & Co., said, "We continue to see declining trading volumes and persistent macroeconomic headwinds. This suggests that trading volumes may remain stagnant for the coming months."

Coinbase expects total trading volume and monthly active trading users to decline further in the second quarter compared to the first quarter but believes the outlook for the entire year will not change significantly. Alicia Haas, Coinbase’s Chief Financial Officer (CFO), said, "While we are clearly seeing a bearish market, it is not yet a time to say that winter has come."

Coinbase reminded shareholders that, considering the high volatility of cryptocurrency prices, investments should be made from a long-term perspective, stating, "We believe these market conditions are not permanent and will focus on the long-term aspects." It added that it will concentrate on seeking next-generation cryptocurrency opportunities beyond just cryptocurrency trading.

Despite Coinbase’s efforts to allay concerns, its stock price plunged after the earnings announcement. On the day, Coinbase closed at $72.99 on the New York Stock Exchange, down 12.60% from the previous day. In after-hours trading, the stock price fell nearly an additional 16%. Coinbase’s stock price has dropped more than 70% since the end of March.