Coinbase stock sank after hours on Tuesday after the cryptocurrency exchange reported third-quarter results that missed expectations, despite a pickup in crypto prices and trading activity that has extended into the current quarter.
The company reported as it tries to navigate whipsaw action in crypto prices. The price of Bitcoin rallied a day earlier to record highs, as concerns about inflation and progress in the exchange-traded-fund world help lift the digital currency.
Coinbase earned $1.62 per share. That was below FactSet estimates for $1.82.
The exchange reported revenue of $1.235 billion. That missed views for $1.614 billion. Coinbase draws revenue from fees on cryptocurrency transactions.
Monthly transacting users dipped from the prior quarter to 7.4 million. Trading volume also shrank over that period.
Coinbase in August said it expected lower trading volume and active users for the third quarter, after a decline in digital-asset prices and trading. But on Tuesday, the company noted that the softer backdrop at the beginning of the quarter “improved meaningfully” later on. That trend, it said, has continued into the fourth quarter.
“We have consistently indicated that volatility is a key factor influencing our transaction revenue,” the company said in a statement. “Q3 illustrates this point.”
Coinbase Stock, Bitcoin Stocks
Coinbase stock fell 12.9% after hours to 310. During the regular session in the stock market today, shares dipped 0.7% to 351.66. The stock rose 5% on Monday.
The cryptocurrency exchange has said it wants to bring more digital assets and other crypto products onto its platform in an effort to attract users. It recently partnered with Meta Platforms’ (FB) Facebook to handle cryptocurrency storage duties for a pilot of Facebook’s new digital wallet.
However, Coinbase recently shelved plans to launch a lending program after the SEC threatened to sue.
Among other Bitcoin stocks, MicroStrategy (MSTR) added .06% after hours. Shares were extended from a 777.17 buy point on a cup-with-handle base. Marathon Digital (MARA) fell 2.4% late Tuesday, after spiking 18% on Monday. Grayscale Bitcoin Trust (GBTC) was up 2.3%.
Digital-asset miner Hut 8 Mining (HUT), which reports earnings Thursday, was down 0.7% after hours.
ProShares Bitcoin Strategy (BITO) was up 0.2%. The fund was among a handful of Bitcoin-related ETFs that recently received regulatory approval to begin trading.
Price Of Bitcoin Rises
The price of Bitcoin rose 1.7% on Tuesday to $67,471. That price has been climbing since late July, and ran up sharply in October.
Some analysts attributed the ongoing rally in Bitcoin’s price to concerns about inflation, which has reduced the buying power of traditional currencies. Coindesk, citing data from Chainalysis, also said that larger investors had begun scooping up more Bitcoin recently.
“Bitcoin is bouncing higher again, close to all-time highs fueled by expectations that the era of cheap money looks set to hang around for longer, while inflation is expected to keep ticking up,” Susannah Streeter, an analyst at Hargreaves Lansdown, said in emailed commentary on Monday.
Still, she noted that the Federal Reserve’s decision to taper bond purchases this month, and potential tightening up ahead, could prompt a brief sell-off in Bitcoin. A strong jobs report for October, Reuters noted, also left investors wondering about the impact on the Fed’s trajectory for raising interest rates — one of the central bank’s tools for stemming inflation.
The price of Bitcoin and Bitcoin stocks have taken hits this year following China’s crackdown on crypto trading, and Tesla (TSLA) CEO Elon Musk’s hedging on the cryptocurrency. Concerns remain about its energy usage and market manipulation.
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