Coinbase Q4 2022 Report Taps Earning Forecasts — COIN Stock Doubles YTD

YEREVAN (CoinChapter.com) – Coinbase, the largest crypto exchange in the US, published fourth-quarter earnings after the closing bell on Feb 21, reporting nearly $605 million in net revenue, vs. the $590 million expected by Refinitiv analysts.

Notably, the exchange’s user base continued to shrink. The number of active users declined from 8.5 million in Q3 to 8.3 million in Q4, causing a decline in transaction revenue. Here are more details:

Coinbase Quarterly Earning Report

Despite the higher-than-expected Q4 results, Coinbase’s 2022 revenue plunged nearly 75% from a year earlier due to the so-called crypto winter, which caused an avalanche in cryptocurrency prices throughout the year.

The company also reported a (non-adjusted) net loss of $557 million, a year after Coinbase generated a net income of $840 million during the peak of crypto adoption.

Q4 total transaction revenue declined 12% quarter-over-quarter (Q/Q) and stood at $322 million. Consumer transaction revenue was $309 million, down 11% compared to Q3, while institutional transaction revenue was $13 million, down 32% compared to Q3.

The decline in transaction revenue was driven by lower Q4 total trading volume, although we gained overall trading volume market share in the quarter. Q4 total trading volume was $145 billion, down 9% Q/Q, outperforming global crypto spot market trading volume, which declined 21% Q/Q.

detailed the report.

Also read: Coinbase stock (COIN): 2 bulls vs. 2 bears.

What are the 2023 expectations?

Additionally, the Coinbase team expected 2023 to be “a year of regulatory focus.” However, the report expected the company’s “strong foundation” to make it a “net beneficiary of this new environment.”

Our business decisions do not always match competitive offerings, or result in maximizing near-term growth or profit. But rather they are intended to maximize safety for customers, legitimacy for the crypto economy, and longevity for Coinbase.

stated the report.

Meanwhile, the Coinbase stock COIN declined 10% on Feb 21, following Bitcoin’s trajectory, after doubling year-to-date.

COIN stock doubled YTD

COIN stock traded at $62 a share on Feb 21, following the year-to-date crypto rally, which brought the stock price nearly 100% higher.

Coinbase gets revenue from transactions, so, in theory, the platform shouldn’t depend on crypto prices as long as people trade them. However, the reality does not support the claim. The charts clearly show COIN’s correlation with Bitcoin, which suffered heavy losses in the previous quarter.

The difficulty of short betting could also explain why Coinbase lost monthly transacting users (MTUs) in 2022. Serge d’Adesky, the President and Chief Financial Advisor of Northstar Strategic Investments, agreed.

Most investors, including a surprising number of institutional investors, have a difficult time shorting stocks or betting on their retractions. Rather than using short positions, bearish option plays, or futures markets, investors just move to the sidelines.

said d’Adesky.

Also read: Coinbase stock drops 10% following massive Q2 losses.

He also pointed out that betting on cryptos dropping in value is far more difficult. That’s why most investors don’t do it. “When cryptos are dropping, they prefer to take their shovels and pails out of that sandbox and go play elsewhere,” added the expert.

However, if the winds changed in 2023, and COIN price reaped the effect, doubling in price. Should the crypto rally continue, Coinbase stock will also join the party.

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