The world's largest cryptocurrency exchange Coinbase reported quarterly results late Thursday. COIN stock soared 145% so far this year as the price of bitcoin gained back ground on ETF news and lawsuit wins.
Coinbase Earnings
Coinbase posted its sixth consecutive quarterly loss of 42 cents per share while net revenue fell 17.9% to $663 million. Total revenue declined 8% to $708 million.
Analysts expected Coinbase to report a loss of 76 cents per share, improving from a loss of $4.98 per share last year. Wall Street saw revenue falling 22.3% to $628 million.
Monthly Transacting Users (MTUs), or those that make at least one transaction per month, fell 19% to $7.3 million. FactSet expected a 12.5% to 7.88 million. Consumer trading volume for the quarter dived 70% to $14 billion and institutional trading volume fell 54% to $78 billion.
Canaccord hoisted its price target on COIN stock to 140 from 70 early Wednesday prior to earnings. Analyst Joseph Vafi noted Coinbase remains a crypto "lightning rod" as the company gains "material momentum" across different fronts. Vafi believes Coinbase should have some follow-up momentum again in the second quarter.
Crypto Rally
Cryptocurrency prices and related stocks rallied in mid-June following a wave of applications for bitcoin exchange-traded fund. BlackRock partnered with Coinbase for its iShares Bitcoin Trust ETF, which was filed with the Securities and Exchange Commission on June 15. The SEC has yet to approve any institutional applications for spot bitcoin ETFs.
Crypto firms were handed a major win on July 13 after a judge ruled in favor of Ripple Labs in its court case against the SEC. The SEC accused Ripple of offering its XRP token as an unregistered security. The Southern District of New York ruled that XRP is a security for institutional sales but not when sold to the broader public.
Bitcoin has rallied 75% so far this year and traded around $29,000 late Friday. The world's largest cryptocurrency is off its 2023 high of $31,809 from July 13, and trading at less than half of its record, above $67,000, set in November 2021.
ARK Invest CEO Cathie Wood took profits and steadily unloaded on COIN stock throughout July.
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Cryptocurrency Crackdown
But cryptocurrency companies aren't totally in the legal clear. The SEC charged Coinbase with selling unregistered securities in early June after suing Binance for 13 rules violations.
In an interview with the Financial Times Monday, Coinbase CEO Brian Armstrong alleged the SEC told Coinbase to delist all tokens other than bitcoin prior to the lawsuit.
"They came back to us, and they said ... we believe every asset other than bitcoin is a security," Armstrong told the Financial Times. The SEC denied the accusation in a statement to MarketWatch.
"SEC staff does not ask companies to delist crypto assets," a SEC spokesperson told MarketWatch. "In the course of an investigation, the staff may share its own view as to what conduct may raise questions for the Commission under the securities laws."
In a separate case Monday, a judge ruled the SEC can bring forward its lawsuit against Terraform Labs for allegedly defrauding investors after its stablecoins crashed last year.
COIN Stock
COIN stock retreated 3.8% Friday after sliding about 2.5% at the open. Coinbase stock edged 0.4% higher leading up to Thursday the report.
Shares retreated from a profit-taking zone the past three weeks after vaulting 31% following a July 14 breakout. Shares traded right around their 21-day exponential moving average on Thursday.
Coinbase stock bolted 146% higher this year but is still trading well below its all-time high of 429.54 from April 2021.
You can follow Harrison Miller for more stock news and updates on Twitter @IBD_Harrison
