Crypto Boom Lifts Coinbase: Shares Jump as Profits Blow Past Expectations

Coinbase (COIN) silenced the doubters, handily beating analyst estimates for both earnings and revenue in its fourth quarter report. Fueled by the surging cryptocurrency market, the US-based exchange delivered a stellar performance, sending its stock price skyrocketing in after-hours trading.

The numbers speak for themselves. Coinbase raked in a whopping $1.04 per share, significantly exceeding the measly $0.02 per share expected by analysts. Revenue also topped forecasts, clocking in at $953.8 million compared to the predicted $826.1 million.

“We’re really pleased with the results,” beamed Anil Gupta, Coinbase’s vice president of investor relations. He attributes the success to the “operational rigor” implemented early in the year, which truly paid off throughout 2023.

2023 saw a significant surge in crypto prices, culminating in a frenzy toward the end of the year. The highly anticipated approval of bitcoin ETFs ignited renewed interest in digital assets, and Coinbase was perfectly positioned to ride this wave.

The excitement translated into booming business for Coinbase. Trading volume doubled compared to the previous quarter, hitting a staggering $154 billion, exceeding even the optimistic estimate of $142.7 billion.

Gupta sees the ETFs as a win-win for Coinbase, and the impact is already evident on the platform. As the custodian for 8 out of the 10 spot bitcoin ETFs, the exchange plays a crucial role in this burgeoning space.

While “custody is obviously a relatively small part of the business today,” Gupta emphasizes the long-term benefits of ETFs. They’re “invigorating the entire sector,” leading to increased activity and engagement on the platform.

Coinbase exceeded expectations not only in earnings and revenue, but also in profitability. Their adjusted Ebitda for the year surpassed $964 million, exceeding their own ambitious goal of “meaningful” positive Ebitda.

The momentum doesn’t seem to be slowing down. Coinbase anticipates generating $410 million to $480 million in subscription and service revenue in the first quarter of 2024, already exceeding $320 million as of February 13th.

After rising 3% during the regular session, Coinbase shares jumped another 13% in after-hours trading, finally reflecting the company’s strong performance. Despite some earlier struggles, with Bitcoin itself up 23%, the future seems bright for COIN.

Gupta acknowledges the stock’s volatile performance but remains confident: “Our stock performance has sometimes been better, sometimes lower, sometimes in line, I think the markets will figure that out.”

Read Also: Bitcoin Jumps to $53,000, Raising Hopes for Crypto Market Recovery

Disclaimer: The information provided in this article is for informational purposes only and should not be construed as financial or investment advice. Cryptocurrency investments are subject to market risks, and individuals should seek professional advice before making any investment decisions.

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