This Wednesday, investors moved away from Coinbase shares amid the negative outlook for its quarterly earnings report. The crypto trading company’s third-quarter numbers were notably below analyst expectations. This led to a sharp sell-off in shares in the middle of the week.
By Wednesday, COIN hit a high of $220 per share ahead of the earnings report. The next day, after opening operations, the price fell to $180. During this Friday, a recovery in shares was experienced; However, it was short-lived. Thus, after rising again towards $190 dollars, the price of the shares fell again to $183.
In short, the week closed with a return of -10% for the exchange’s shares. This plunge virtually wiped out gains made over the past 30 days, Yahoo Finance data shows.
As already mentioned, the quarterly earnings numbers were behind the pessimism of investors in the largest exchange in the United States. In this way, Coinbase shares are preparing for a new week of possible additional declines.
Coinbase shares are again below $200. Source: Yahoo Finance
Coinbase Stock Reacts to Disappointing Numbers
Wall Street expectations were for the company’s quarterly earnings to close at $1.26 billion. However, these were $60 million short of that goal. Likewise, the company also failed to achieve earnings per share (EPS) goals. The consensus expected earnings of 41 cents per share for the quarter, but the company reported 21 cents per share.
This last number, despite being widely disappointing, did not prevent the firm’s shares from finishing in the green for the quarter. It should be noted that these numbers are closely related to the drop in activity on the Coinbase platform.
Just like the rest of the centralized exchanges, Coinbase’s profits come from internal trading commissions. Consequently, the company’s trade volume in the quarter decreased by 18% compared to the previous quarter. This equates to a 28% drop in transaction fee earnings.
To get an idea of the sustained decline in commerce on the platform, it is worth noting that in the first quarter it was $312 billion. Meanwhile, in the third quarter it was $185 billion. According to the company, this situation is not linked to its performance, but rather to general economic conditions in the United States.
“We’ve made a lot of effort to diversify our revenue over the years and move away from transaction fee revenue, which is more volatile, not as predictable, and more market dependent,” said Brian Armstrong, CEO of Coinbase.
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