Coinbase Stock Dips On Q2 Revenue Miss And Decreased Trading Volumes

Coinbase (COIN) shares experienced a decline on Thursday after the cryptocurrency exchange reported second-quarter revenue that fell short of analysts’ expectations, according to CNBC. 

Weaker Trading Volumes Impact Coinbase

For the period ending June 30, Coinbase reported a net income of $1.43 billion, or $5.14 per share, a significant rise from just $36.13 million, or 14 cents per share, in the same quarter the previous year. 

This growth was largely driven by a $1.5 billion gain from its investment in Circle (CRCL) and an additional $362 million from its crypto investment portfolio. On an adjusted basis, the company earned $1.96 per share, surpassing estimates of $1.26, according to LSEG.

However, total revenue slightly increased to $1.5 billion, up from $1.45 billion a year ago, yet it still fell short of the anticipated $1.6 billion. Transaction-related revenue totaled $764 million, which missed StreetAccount’s estimates of $787 million. As a result, shares fell 6% in after-hours trading.

Analysts had predicted a weaker second quarter following a period of market enthusiasm in the first quarter, when traders were optimistic about potential regulatory improvements from the Trump administration. 

As attention in Washington shifted towards tariffs, speculative trading by retail investors declined across centralized crypto exchanges (CEXs). Nonetheless, inflows into crypto exchange-traded funds (ETFs) and purchases by treasury companies helped sustain market prices.

Short Of Analyst Expectations

Coinbase did report a 16% year-over-year growth in retail trading volume, reaching $43 billion. However, this was below the $48.05 billion expected by analysts. 

The company’s subscription and service offerings, which encompass stablecoins, staking, interest income, and custody services, experienced a 9% increase from the previous year, totaling $655.8 million. This figure was also below analysts’ projections of $705.9 million.

Revenue from stablecoins, a key theme in the crypto market during the second quarter, came in at $332.5 million, closely aligning with estimates of $333.2 million. This represented a substantial 38% increase compared to the same period last year and a 12% rise from the first quarter. 

The surge in stablecoin interest was partly fueled by the successful June IPO of Circle, the issuer of the USDC stablecoin. Coinbase benefits from a revenue-sharing agreement with Circle, allowing it to retain 100% of the revenue generated from USDC held on its platform and approximately 50% of revenue from USDC on other platforms.

Despite the challenges in trading volumes, the company announced plans to broaden its services beyond cryptocurrencies, introducing tokenized real-world assets, derivatives, prediction markets, and early-stage token sales, starting with US users.

Year-to-date, Coinbase shares remain up more than 50%, outperforming the S&P 500 benchmark, which the stock joined in May. As of this writing, COIN closed the trading day at $377.

Featured image from DALL-E, chart from TradingView.com