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Coinbase's stock price is in freefall following disappointing earnings results from the crypto exchange but a sizeable share buyback might console shareholders.
Reporting its third-quarter earnings on Wednesday, Coinbase fell short of analysts' predictions, with per-share earnings at $0.28, below the expected $0.45. Revenue of $1.21 billion missed the $1.26 billion forecast too, while Coinbase's net income of $75 million was short of the expected $11.2 million.
Coinbase’s trading volume dropped 18% in Q3, with institutional trading down by 20%. Its services revenue, including income from stablecoin USDC and staking, was $556 million in Q3, down 7% due to falling crypto prices.
However, the company met metrics including positive net income and its expense guidance, as well as growing its workforce by 5%. Stablecoin revenue was one of the few areas to see improvement compared to the second quarter. Coinbase reported $247 million in stablecoin revenue, up slightly from $240 million in the previous quarter. Corporate interest and other income also saw a modest increase
"We saw stablecoin pair trading volume grow significantly quarter on quarter. In part, we believe this growth was driven by a product update which enabled an easier way for Advanced traders to trade stablecoins on our platform," Coinbase said in its statement.
"While we generate little to no fees on our stablecoin pair trades, growing adoption of stablecoins (and USDC specifically) is core to our strategy as we monetize USDC via our commercial arrangement with the issuer of USDC."
Coinbase chief financial officer Alesia Haas said in an interview, “What’s super important here is that Coinbase met all of its financial objectives.”
Nonetheless, the company's stock price is down more than 15% over the last 24 hours.
In a shareholder letter, Coinbase announced a $1 billion stock buyback program, approved by the board. "In October 2024, our board of directors authorized and approved a share repurchase program, which provides for the repurchase of up to $1.0 billion of our outstanding Class A common stock without expiration," Coinbase explained.
"The timing and amount of any repurchases will depend on market conditions, and any repurchases will be made at our discretion. This program does not obligate us to repurchase any dollar amount or number of shares of our Class A common stock, and the program may be modified, suspended, or discontinued at any time."
Looking ahead, Coinbase expects current-quarter subscriptions and services revenue to be between $505 million and $580 million.
“As we go into Q4, we are seeing an increase in volatility heading into the election,” Haas said. “Crypto markets turn very quickly.”
Coinbase's weak earnings come as the crypto market continues to strengthen. Earlier this week, Bitcoin finally crossed the $70K mark, although the leading cryptocurrency has slipped slightly at the time of writing.
Blockhead
Payment giant Visa recently partnered with Coinbase to allow real-time crypto purchases through debit cards.
Blockhead
Eligible Visa debit cardholders in the US and EU will be able to deposit funds directly into their Coinbase accounts, with some transactions processed instantly. These users can also use their debit cards to buy cryptocurrencies on Coinbase and withdraw funds directly to their bank accounts.
