Coinbase Global (COIN) shares plunged lower Wednesday after the cryptocurrency trading platform posted weaker-than-expected first quarter revenues and cautioned that activity would likely continue to slide amid the ongoing upheaval in digital currency markets.
Coinbase said revenues for the three months ending in March fell 35% from last year to $1.17 billion, well shy of Street forecasts, as retail trading volumes fell 38% to just $74 million. The group also posted a surprise loss of $1.98 per share.
Overall trading volumes were only down 7%, thanks to a big jump in institutional participation, but the ongoing collapse in bitcoin prices has current quarter activity trending down by 30%. Monthly Transacting Users, or MTUs, were down 22% from the prior quarter to 8.9 million, Coinbase said, with both metrics forecast to be "lower than Q1" levels.
Bitcoin, which accounts for around a quarter of Coinbase trading volume, has fallen more than 53% since reaching an all-time high of $67,802.30 in November of last year, while the Nasdaq Composite index is down around 27.2% from its November 19 peak.
"Digital asset plays in the equities markets remain a new theme. In our view, as long as underlying industry infrastructure, regulation, and security continue to evolve, we believe that simple correlation to other risk-on asset classes is secondary to the long term outlook," said Canaccord Genuity analyst Joseph Vafi, who carries a 'buy' rating with a $120 price target (down from $275) on Coinbase stock.
"But there will be more than average volatility here at the same time. And in the case of Coinbase, we see a story that can likely exploit the current and future air pockets to solidify its industry position," he added.
Coinbase shares were further pressured by a separate disclosure form filed by Coinbase that suggested crypto assets held on the platform by investors could be seized by administrators in the event of bankruptcy.
Coinbase shares were marked 18% lower in early Wednesday trading to change hands at $59.12 each, a move that would extend the stock's year-to-date decline to around 76.2%.
