Coinbase posts loss twice as large as forecasts

Net loss Coinbase in Q2 2022 was $1.1 billion, or $4.98 per share, which doubled analysts’ expectations ($2.47). In after-hours trading, shares fell 8% after a 10.55% drop in the main session.

Our Q2’22 financial results are in.

Check out our letter to shareholders 👇https://t.co/RuDx4bPADb

— Coinbase (@coinbase) August 9, 2022

For the same period in 2021, Coinbase posted net income of $1.6 billion; in Q1 2022 — $429.7 million loss.

Net revenue in April–June fell from last year’s $2.03 billion to $803 million. This was due to a decline in prices for digital assets — trading volume on the platform amounted to $217 billion versus $462 billion. The number of traders who executed at least one trade during the month rose from 8.8 million to 9 million. The value of assets fell from $180 billion to $96 billion.

Trading commissions accounted for 82% of net revenue. The remaining share came from revenues grouped in the subscriptions and services category.

Coinbase remains heavily dependent on retail traders. This segment accounted for $616 million of the $655 million in trading-commission revenue.

“Dramatic shifts in the market have affected transaction revenue, but they also underscored the strength of our risk-management program. We are focusing on priorities and tightening expense management. […] Coinbase remains focused on the long term and on building the future,” — in the letter to shareholders.

Since the IPO on Nasdaq Coinbase’s shares have fallen 77%.

Recall that in July ARK Invest’s Kathy Wood sold Coinbase shares worth $75 million. The move followed reports of an investigation by the SEC into the activities of the bitcoin exchange.

On July 21, the U.S. Department of Justice announced the arrest of former Coinbase product manager Ishan Wahi. He was charged with fraud related to insider trading. Also named in the case were Wahi’s brother and Samir Ramani.

The SEC filed suit against the suspects with similar charges, emphasising that the case concerns securities fraud. The agency classified 9 of the 25 cryptocurrencies that the defendants allegedly used in their operations.

As recalled, an aide to U.S. Senator Cynthia Lummis told reporters that the SEC has begun reviewing every cryptocurrency exchange registered in the country. He said the Coinbase investigation is the tip of the iceberg.

In August, Coinbase agreed to cooperate with BlackRock. Clients of the latter will gain direct access to trading digital assets via the portfolio-management system Aladdin.

Also recently the bitcoin exchange opened Ethereum staking for institutional clients.

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