Coinbase revenue could drop more than 75% amid crypto slump

Coinbase Global, Inc. (COIN), the second-largest cryptocurrency exchange by trading volume, likely posted a fourth consecutive quarter of losses as transaction revenues fell and crypto prices stagnated for nearly a year.

Coinbase likely posted a loss of $568.1 million for the fourth quarter after posting a profit in the same period a year earlier, according to estimates compiled by Visible Alpha. Earnings per share (EPS) are expected to be -$2.48. Revenue likely fell by more than three quarters to $588.6 million, the lowest in two years.

Trading volume on Coinbase’s exchange platform fell every quarter of 2022 as investors shied away from cryptocurrencies amid a market downturn. The high-profile collapse of the FTX exchange in November exacerbated investor reluctance due to concerns that their money could be permanently lost in similar situations on other exchanges.

Coinbase also faced growing regulatory concerns late last year. In January, the firm reached a settlement with New York regulators, including a $100 million fine for compliance and know-your-customer (KYC) issues.

A good result for Coinbase is that, as one of the largest exchanges with a reputation among customers for reliability, the decline in trading volume slowed in the final months of the year amid the FTX debacle. Volume has increased on Coinbase’s platform this year while rivals such as Kraken and Gemini have faltered, although this will not be reflected in the upcoming financial report.

Shares of Coinbase surged in early 2023 as the price of cryptocurrencies rose, but the stock is still down 66% over the past year, compared with a 10% drop for the S&P 500 Information Technology Index.