Key Takeaways:
- COIN jumps 5% on the bullish quarterly report.
- Coinbase boasts $663 million in net revenue, largely based on increased interest income and trading volumes.
- The exchange retaliates against SEC with a claim to drop charges.
YEREVAN (CoinChapter.com) – Coinbase stock COIN changed hands at $90 after the New York trading session on Aug 3 – a 5% daily uptrend partially triggered by a bullish Q2 earning report from the exchange that exceeded market expectations.
Notably, the uptick came after a 20% drop in the previous two weeks. However, the report results could elevate investor spirits as the stock still boasts a 183% year-to-date advance, outpacing the S&P 500 average.
Q2 earnings report exceeds expectations.
According to the report, Coinbase experienced a net loss of $97 million and $663 million in net revenue for the second quarter, a 10% drop. The cryptocurrency trading volume fell 37% QoQ to $92 billion from $145 billion in Q1, and trading revenue fell to $327 million from Q1’s $375 million.
However, the results exceeded the company’s projections. For example, the “subscriptions and services” revenue streak stood at $335 million, against the expected $300 million.
Additionally, for the first time, the exchange’s recurring revenue, i.e., USDC income, staking, and subscriptions, exceeded transaction revenue – 51% to 49%. Coinbase previously reported its plan to develop alternative revenue streaks to retire from depending on transaction revenue, as was the case before 2023.
Admittedly, the exchange still highly relies on trading volumes. “In Q2, crypto volatility, which is a key input into our trading business, continued to decline, and it reached multi-year lows,” confirmed finance head Alesia Haas in the earnings call.
However, the revenue breakdown below demonstrates the consistency of Coinbase’s interest income growth – nearly 530% year-over-year.
Notably, the interest income streak remains vulnerable due to its high dependence on USDC redemptions. Circle’s stablecoin has been losing market share since Q3, 2022. As a result, USDC shaved over 40% of its market cap year-to-date.
Meanwhile, the exchange’s intent to retaliate against the US Securities and Exchange Commission (SEC) added a bullish incentive.
Coinbase vs. SEC – round 2.0
In June, the SEC filed a lawsuit against Coinbase, accusing the crypto exchange of listing unregistered security tokens. Coinbase chief executive Brian Armstrong asserted that digital assets listed on the exchange went through a “rigorous” review. He added that “the SEC simply has not been fair or reasonable when it comes to its engagement on digital assets.”
Additionally, Ripple’s recent win against the regulator elated spirits at Coinbase. Paul Grewal, the Chief Legal Officer at Coinbase, announced the company will file to dismiss the SEC’s case on Aug 4. “For most people, Friday’s just the day before the weekend. But after this Friday, the neighborhood will never be the same,” later tweeted Grewal.
With respect to the litigation with the SEC, I want to be very clear. We do think we can win. We expect to win. […] Our goal across not just the litigation, but all of our efforts engaging with the SEC and engaging with the U.S. government as a whole is to achieve regulatory clarity
said the CLO
Grewal previously pushed the SEC to provide regulatory clarity, getting no response from the watchdog. However, the executive added that regardless of any particular outcome, “clarity itself is the goal.”
