(Bloomberg) -- Coinbase Global Inc. shares fluctuated in post-market trading after the biggest U.S. cryptocurrency exchange reported fourth-quarter revenue that beat estimate, while cautioning that trading volume will decline in the first quarter.
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Coinbase reported total sales of $2.5 billion in the fourth quarter, beating the $2 billion estimate by analysts. The metric of monthly transacting users was 11.4 million, beating the average analyst estimate of 9.8 million. In the third quarter, monthly transacting users was 7.4 million.
Key Insights
Quarter-to-date, the company has seen a decline in crypto asset volatility and crypto asset prices compared to the fourth-quarter. “We believe that retail monthly transacting users and total trading volume will be lower” in first quarter as compared to fourth-quarter, it said in an investor letter.
Coinbase released expectations for the full-year 2022 for the first time. It expects annual average retail monthly transacting users of 5 to 15 million.
Coinbase shares have been closely tracking with the price of Bitcoin, which has plummeted to below $35,000 from a peak of nearly $69,000 in early November. Investors have been concerned about a potential crypto winter, which could dampen enthusiasm from retail traders.
Most of the company’s revenue comes from trading, especially by individuals. The company has been diversifying revenue streams through subscriptions and services such as custody.
Coinbase has been preparing to launch an NFT marketplace, including entering a partnership to allow users to make purchases through Mastercard Inc. cards.
Coinbase has been laying the groundwork to expand into derivatives. In January, it acquired futures exchange FairX, a regulated entity, in its biggest step yet toward expanding into crypto derivatives. Exchanges outside the U.S. such as Binance and OKEx have the lion’s share of the derivatives market. FTX.US, one of Coinbase’s U.S. competitors, also offers derivatives trading through its acquisition of LedgerX LLC.
Market Reaction
Coinbase’s shares are down about 45% from their closing price of $328 on its first day of trading on the Nasdaq back in April.
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