Coinbase Posts $79M Net Loss But Beats Expectations

On May 4, Coinbase Global reported a fifth consecutive quarter of losses. The results show that customers and investors have fallen out of favor with the company despite a recovery for crypto markets during the first quarter.

The company posted a loss of $79 million, which is much lower than the $430 million it lost in the same period last year. The net loss per share equated to $0.34.

The results have beaten analysts’ expectations which were losses of $316 million or $1.45 per share.

Its total revenue was $772.5 million, which was 37% lower than the $1.1 billion in revenue for Q1 2022. However, total operating expenses were less than $900 million resulting in an operating loss of $124 million, according to the report. The losses were limited by a 20% cut in the Coinbase workforce in January.

Coinbase Retail Volumes Down

The firm’s retail trading activity did not grow much in the first quarter despite a 50% gain for the crypto markets. Its total trading volume fell to $145 billion for the period from $309 billion a year ago. As a result, its total transaction revenue fell 63% to $375 million from more than $1 billion a year ago.

However, Coinbase does have some of the highest fees in the industry, so savvy traders may have sought alternatives.

Coinbase is mired in a regulatory quagmire with threats of SEC enforcement action and various lawsuits looming over it. Chief Legal Officer Paul Grewal said the legal fight with the SEC could be lengthy, but the firm expects to be fully operational in the meantime.

This week, the firm stated that it will be ceasing its Coinbase Borrow services as of May 10. But it didn’t clarify whether this was due to regulatory pressure.

The firm was also hit with a lawsuit this week in which executives were accused of dumping millions in stock to prevent losses by insider trading.

COIN Price Surges

Company stock surged almost 9% in after-hours trading, according to MarketWatch. As a result, COIN prices hit $53.75 on May 4.

Furthermore, shares in Coinbase have gained 60% since the beginning of the year but remain down 84% from their peak price of $343 in November 2021.

COIN is currently down around 36% from its 2023 high of $84 on March 21 as regulatory pressure intensifies. By comparison, crypto markets have retreated just 7.5% from their 2023 peak in mid-April.