Coinbase stock climbed Friday after its earnings report late Thursday showed a major decline in crypto trading volume. Shares Coinbase rallied during Thursday trade after the cryptocurrency exchange started offering crypto futures late Wednesday to eligible U.S. retail customers. Elsewhere, former FTX CEO Sam Bankman-Fried was found guilty on all seven charges for his role in the collapse of the crypto exchange late Thursday night. Bitcoin and cryptocurrency prices traded lower on Friday after spiking late Wednesday.
Coinbase Earnings
The crypto exchange reported a loss of 1 cent per share, improving from a loss of $2.43 per share last year. Total revenue jumped 14% to $674.1 million, ending a six-quarter streak of double-digit declines.
Analysts polled by FactSet expected Coinbase to report a loss of 55 cents per share on 10.4% revenue growth to $651 million.
Total transaction revenue declined to $288.6 million, down from $327.1 million and $365.9 million a year ago. FactSet guided transaction revenue at $276 million.
Consumer transaction revenue fell to $274.5 million, beating estimates of $256 million. Institutional transaction revenue came in at $14.1 million, below forecasts of $15 million.
Subscription and services revenue was $334.4 million, essentially flat quarter-over-quarter and up nearly 59% from 2022. FactSet expected subscription revenue of $323 million.
Total trading volume fell to $76 billion in Q3, down from $92 billion in Q2 and $159 billion a year ago.
Retail trading volume fell to $11 billion, dropping 21% from last quarter and down nearly 57% from the same period last year.
Institutional trading volume declined 17% quarter-over-quarter to $65 billion. Coinbase reported $133 billion in institutional trading volume in 2022.
The company guided flat Q4 subscription and service revenue compared to the third quarter and noted it generated $105 million in transaction revenue in October.
Crypto Futures Launch
The publicly-traded crypto exchange announced Wednesday evening that eligible customers in the U.S. can now trade futures contracts tied to bitcoin and ether, the token for ethereum, through Coinbase Financial Markets.
Futures contracts allow investors to speculate on future price movements. The contracts are agreements to buy or sell an asset or security at a specified price and date. Coinbase is also offering leverage trading, which allows investors with borrowed funds to increase their trading position, but comes with higher levels of risk.
The new contracts are "specifically sized for retail traders," Coinbase wrote in the release. Bitcoin futures contracts represent 1/100th of a bitcoin while ether contracts represent 1/10th of ethereum.
The company received regulatory approval in August from the National Futures Association, a U.S. Commodity Futures Trading Commission-designated organization. At the time, Coinbase reported the crypto derivatives market represents about 75% of worldwide crypto trading volume.
Coinbase Stock, Bitcoin Price Action
COIN stock rose 1.4% Friday after falling about 4.8% premarket. Shares rallied nearly 9% Thursday prior to the report, marking its fourth straight day of gains. The stock rallied 142% so far in 2023 as the price of bitcoin and other cryptocurrencies rose on a string of regulatory court wins and hopes a spot bitcoin ETF will launch soon.
Bitcoin traded around $34,600 Friday after rallying to $35,938 overnight Wednesday — its highest level since May. The world's largest cryptocurrency more than doubled so far in 2023.
Ethereum hovered above $1,820 Friday, down from its Wednesday night peak of $1,874. ETH is trading around its mid-August levels and is up about 53% so far this year.
Grayscale Bitcoin Trust, which Grayscale Investments hopes to convert into a spot bitcoin ETF, ticked lower Friday and rose modestly Thursday.
Bitcoin miner Marathon Digital retreated 4.6% Friday after jumping more than 10% Thursday.
SBF Found Guilty
FTX founder Sam Bankman-Fried was found guilty late Thursday on all seven criminal charges for his role in the collapse of the cryptocurrency exchange last year. Bankman-Fried, 31, faces up to 110 years in prison with sentencing set for March 28, 2024.
Jurors delivered the verdict after roughly four and a half hours of deliberations on Thursday. The defense and prosecutors presented their closing statements to the five-week trial on Wednesday.
Bankman-Fried, commonly referred to as SBF, was convicted on multiple charges of conspiracy, wire and securities fraud. He pleaded not guilty in December.
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