Coinbase Shares Jump 12% in Premarket Trading

A U.S. judge denied Coinbase's motion to dismiss the SEC's lawsuit alleging it facilitated unregistered trading and sales of crypto securities.

Key Insights

  • Coinbase shares jump 12% in premarket trading as crypto exchange posts first profit in 2 years in Q4 2022
  • Net income hit $273 million with revenue up 50% amid bitcoin ETF approvals driving crypto market rebound
  • Trading revenue primary growth driver though subscription/services steady; consumer trading revenue up 79%

NEW YORK (MarketsXplora) – Shares of Coinbase Global Inc (COIN.O) jumped 12% in U.S. premarket trading on Friday after the cryptocurrency exchange posted its first profit in two years in the fourth quarter.

The largest U.S. digital asset trading venue reported net income of $273 million for the October-December period. This marked Coinbase’s first positive earnings since Q4 2021, with net revenue soaring nearly 50% to $905 million from $605 million a year earlier.

The results align with a resurgent crypto market in Q4 2023, ignited in part by U.S. regulators approving the first spot bitcoin exchange-traded funds (ETFs). The news stoked institutional and retail investor appetite for cryptocurrencies on expectations it could drive mainstream adoption.

Coinbase said trading volumes were the primary revenue growth engine, while subscription and services revenue held relatively steady. The company saw trading patterns mimicking early 2023 when crypto prices were similarly volatile following the bitcoin ETF launch.

Consumer trading revenue spiked 79% quarter-on-quarter to $493 million. In an interview with CNBC, Coinbase CFO Alesia Haas said the company maintained fee rates across both its basic and advanced tiers amid the heightened platform volumes.

“In Q4, when we saw higher volatility, we grew Simple trading, but Advanced grew more,” Haas noted about the two pricing levels.

Industry analysts pointed to the results as validation of Coinbase’s moves to diversify revenue sources beyond trading. “Reliance on trading income remains in focus, but subscription and services growth during steadier periods cushions volatility impact,” said Edward Ford, fintech managing director at Wilkins Advisory.

With macroeconomic optimism returning in 2024, some expect Coinbase and its peers to build on renewed crypto and blockchain interest. But the sector remains sensitive to wider market shifts as central bank policies evolve.

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