Coinbase Stock Price Falls After Earnings Release

Cryptocurrency exchange giant Coinbase reports a jump in quarterly trading volumes and transaction revenue, with its earnings topping Wall Street forecasts. But Coinbase stock’s price was falling after the earnings release.

The U.S. crypto exchange reports a total revenue of $2.2 billion in the second quarter. Coinbase’s net profit for the quarter was $1.6 billion, up nearly 4,900% from a year earlier. Coinbase’s trading volume rose to $462 billion from $335 billion. Monthly transaction users went to 8.8 million from 6.1 million in the first quarter.

The crypto market slump weighs on Coinbase’s earnings. The value of assets on Coinbase’s platform is down from $223 billion to $180 billion. This reflects the drop in prices of Bitcoin and other cryptocurrencies in the period.

Coinbase reveals the trading volume was weak in July, with an improvement in August. Yet, the transaction volume on Coinbase remains down from earlier in the year. Therefore, Coinbase expects monthly users and trading volume to be lower in the third quarter.

As the first US crypto exchange to go public, Coinbase is working to onboard large financial institutions to its platform. Coinbase’s retail trading volume of $145 billion was up 21% from the first quarter. On the other hand, institutional volume on Coinbase rose 47% to $317 billion.

Shift From Bitcoin to Ethereum on Coinbase’s Trading Platform?

“Despite price movements, we saw billions of dollars of net asset inflows and new customers added throughout Q2,” says Coinbase. Additionally, more than 9,000 financial institutions are now using Coinbase. Its corporate partnerships include Tesla CEO Elon Musk, Dan Loeb’s hedge fund Third Point, among others. On the retail side, Coinbase is getting more traders to stake their tokens to earn a reward or yield.

Also, Coinbase reports a shift in the type of asset trading from Bitcoin (BTC) to Ethereum (ETH) and other crypto. 24% of Coinbase’s total trading volume for the quarter was Bitcoin, down from 39% in Q1.

Ethereum trading volume on Coinbase’s platform beats Bitcoin trading volume for the first time ever. Coinbase believes the driving factors are the growth in the DeFi and NFT ecosystems, and the increasing demand for Coinbase’s ETH2 staking product.

Brian Armstrong, Coinbase’s CEO plans to list more crypto tokens on the trading platform in the future. “We really want to be the Amazon of assets,” says Armstrong. Coinbase has listed 22 new cryptocurrencies in the second quarter, more than the entire year 2020. Armstrong also plans to expand the DeFi products on the platform, targeting mainstream customers and institutions.

During April’s mega listing, Coinbase opened at $381 per share. Coinbase stock price fell about 29% since the direct listing. Coinbase is trading at $271.88 after market hours.

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