Coinbase Posts First Quarterly Profit Since 2021
Coinbase Global has announced its first quarterly profit since 2021, driven by strong trading volumes and renewed interest in cryptocurrency. This news has resulted in a nearly 13% increase in the company’s shares.
Renewed Investor Enthusiasm for Crypto
The recent approval of the first spot bitcoin exchange-traded funds (ETFs) by the U.S. Securities and Exchange Commission (SEC) has reignited investor enthusiasm for cryptocurrency. The anticipation of this decision had already caused a 57% increase in bitcoin’s price during the last three months of 2023.
Impressive Fourth Quarter Performance
Coinbase experienced a significant jump in transaction revenue during the fourth quarter, with a 64% increase to $529.3 million. This surge was mainly driven by the approval of ETFs and the subsequent rise in crypto trading.
Strong Outlook for Subscription and Services Unit
Coinbase is expecting a strong first quarter for its subscription and services unit, which includes businesses other than trading. The company forecasts revenue between $410 million and $480 million, surpassing estimates from LSEG.
Stablecoin Revenue Boost
The partnership between Coinbase and fintech firm Circle has proven lucrative for Coinbase. Revenue from stablecoins, particularly USD Coin (USDC), increased significantly due to interest earned on reserves backing USDC.
Profitability and Analyst Expectations
In the fourth quarter, Coinbase reported a profit of $273.4 million, compared to a loss of $557 million in the previous year. Analysts had predicted a loss of 1 cent per share, highlighting the company’s impressive performance.
Long-Term Concerns and Company Response
Some analysts have expressed concerns that the approval of spot ETFs may lead investors to seek crypto exposure outside of the Coinbase platform. However, Coinbase’s CFO, Alesia Haas, dismissed these concerns, stating that ETFs have been beneficial and additive to the industry.
Hot Take: Coinbase Achieves Profitability Amidst Crypto Resurgence
Coinbase’s first quarterly profit since 2021 reflects the renewed interest in cryptocurrency and the positive impact of spot bitcoin ETFs. The company’s strong performance in transaction revenue and stablecoin partnerships has contributed to its profitability. Despite concerns about potential competition from other platforms, Coinbase remains optimistic about the future of cryptocurrency trading. This milestone highlights the growing acceptance and adoption of digital assets in mainstream finance.
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