Coinbase Shares Soar Following Strong Earnings and Revenue Beat

Cryptocurrency exchange Coinbase (COIN) experienced a significant jump on Friday following its Q4 report, released late Thursday, which surpassed Wall Street’s predictions. JPMorgan had upgraded COIN stock before the results were announced.

Coinbase reported diluted earnings of $1.04 per share, a marked improvement from the loss of $2.46 per share the previous year, marking the end of seven consecutive quarterly losses. Total revenue surged by 51% to $953.8 million, marking the exchange’s second consecutive increase after six quarters of double-digit declines.

FactSet had expected earnings of 2 cents per share on a 31% rise in revenue to $826 million.

Consumer transaction revenue surged by nearly 60% year-over-year to $492.5 million, up from $274.5 million in Q3. Institutional transaction revenue also saw a significant increase, rising by 173% to $36.7 million from $14.1 million in the previous quarter.

Total subscription and services revenue climbed by almost 33% to $375.4 million. Custodial fee revenue increased to $19.7 million compared to $11.4 million last year and $15.8 million in the previous quarter. For Q1, Coinbase anticipates subscription and services revenue to range from $410 million to $480 million.

JPMorgan upgraded COIN stock to neutral from underweight earlier on Thursday due to the surge in bitcoin, ethereum, and broader cryptocurrency prices. The firm believes that the launch of spot bitcoin ETFs has led to significant bitcoin price appreciation, contributing to better spot bitcoin ETF flows and driving digital asset prices higher. JPMorgan expects cryptocurrency prices to sustain and improve Coinbase’s activity levels and earnings power. The firm maintained its $80 price target on COIN stock, which is 50% below where shares closed on Wednesday.

Bitcoin’s price traded above $51,800 late on Friday after reaching $52,838 overnight, surpassing December 2021 levels. The total market capitalization of all bitcoins exceeded $1 trillion for the first time in more than two years on Wednesday. Bitcoin is up by nearly 23% so far this year.

Meanwhile, Coinbase serves as a custodian for eight of the newly-issued spot bitcoin ETFs, which have continued to surge as bitcoin rallies. The spot bitcoin ETFs rose by less than 1% on Friday after a slight decline on Thursday and a more than 4.5% increase on Wednesday.

These ETFs accumulated more than $10 billion in assets during their first month of trading, which ended on Feb. 11, according to Zacks.

BlackRock’s iShares Bitcoin Trust (IBIT) leads in terms of fund inflows since the spot bitcoin ETFs launched on Jan. 11, reporting inflows of $4.84 billion as of Feb. 14, according to BitMEX Research. The Fidelity Wise Origin Bitcoin Fund (FBTC) follows with $3.43 billion in inflows.

Despite Grayscale Bitcoin Trust (GBTC) experiencing outflows of about $6.68 billion through Feb. 14, which have slowed, it remains the leader in terms of assets under management, with $22.83 billion.

Although Grayscale has experienced outflows, the spot bitcoin ETFs saw a total of about $4.12 billion in inflows since launch, according to BitMEX Research.

Coinbase stock surged by 8.8% on Friday after an initial spike of more than 15% in early trading. Shares surpassed a buy point of 187.39 for a third-stage cup base in morning trade before gains moderated. Shares had risen by 3.3% during trading hours on Thursday and jumped by 14.2% on Wednesday.

So far this month, shares are up by 42.5%, but they have only gained about 3.7% so far this year.