Coinbase Stock Falls Amid Mixed Financial Results

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In Brief
  • Coinbase’s stock fell in after-hours trading in light of its mixed financial results.

  • Total sales were below some analysts’ expectations, while net income exceeded them.

  • Coinbase doesn’t expect major profits going forward, but plans expanding acquisitions and services.

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Coinbase (COIN) stock fell in after-hours trading in light of its mixed financial results.

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Coinbase shares fell past $250 for this first time in after-hours trading. This was the reference price set by Nasdaq for its direct listing on April 14, when it debuted at $381.

Coinbase has a mixed April

In its letter to shareholders, Coinbase reported total sales of $1.8 billion, in line with the company’s expectations in April. However, it falls slightly below the $1.81 billion analysts polled by Bloomberg expected. The company reported a net income of $771 million, which fell in the expected range of $730 million to $800 million. Although this exceeded analysts’ expectations of $762.6 million.

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“Coinbase’s strong 2Q21 trading volume guidance – equal or better than the enormous $335 billion it posted in 1Q21 – and its boosted 2021 scenarios for monthly transacting users were the key takeaways, in our view,” said BTIG analyst Mark Palmer.

The road ahead

The letter also included Coinbase’s expectations for the near future. For instance, the company’s full-year expectations for monthly transacting users increased. This is likely due to the number of these customers rising to 6.1 million in the first quarter. This more than doubled the amount of the prior quarter. Additionally, Coinbase expects its Q2 total trading volume to meet or slightly exceed that of Q1.

However, Coinbase said that investors shouldn’t expect major profits going forward. “We seek to operate the company at roughly break-even in terms of profitability, smoothed out over time, for the time being,” said the exchange. Coinbase finished the quarter with nearly $2 billion in cash and equivalents. 

Coinbase emphasized that it’s focusing on expansion, and will likely make bigger acquisitions than in the past. This will continue its trend of recent acquisitions, including analytics platform Skew. It also plans to “substantially” increase marketing this year. For example, investments in sales and marketing will amount to between 12% and 15% of revenue.

Coinbase also intends to add new services. For instance, facilitating non-fungible token (NFT) trading on its app. It also wants to attract larger customers with more services. Although most of the company’s revenue comes from retail users, institutions account for most of the assets it holds under management. Coinbase added that competition is another contributing factor to this end.

“Our competitors are supporting certain crypto assets that are experiencing large trading volume and growth in market capitalization that we do not currently support, as well as offering new products and services that we do not offer,” the company said.

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Nick is a data scientist who teaches economics and communication in Budapest, Hungary, where he received a BA in Political Science and Economics and an MSc in Business Analytics from CEU. He has been writing about cryptocurrency and blockchain technology since 2018, and is intrigued by its potential economic and political usage. He can best be described as an optimistic center-left skeptic.

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