Coinbase earnings miss the mark, sending shares lower despite mammoth $2.9 billion deal
Coinbase, the largest crypto exchange in the US, reported first-quarter earnings today and missed both revenue and earnings-per-share estimates, sending shares lower in the aftermarket.
The company reported Q1 revenue of $2 billion, down 10% quarter over quarter, and earnings per share of $0.24, well below consensus estimates of $2.1 billion and $1.93 EPS, according to FactSet.
Meanwhile, transaction revenue was $1.3 billion, down 19% quarter over quarter.
Earlier today, Coinbase announced the acquisition of Deribit, the world’s biggest trading platform for bitcoin and ethereum options, for a massive $2.9 billion — the biggest crypto deal ever.
Mark Palmer, managing director at Benchmark Equity Research, told Sherwood News that while Coinbase’s subscription and services revenue was a bit light during the quarter, “it feels like we’re picking nits when the company this morning announced the largest deal ever in the digital assets space.”
“The Deribit deal is poised to boost Coinbase both in terms of its international presence and its institutional offering, so a few million less revenue than consensus on the subscription and services line shouldn’t matter in the bigger picture,” he added.
The deal “outshines even Ripple’s Hidden Road acquisition from just two weeks ago,” Nic Puckin, founder of Coin Bureau, said.
In its shareholder letter, Coinbase also thanked the crypto-friendly administration, citing several milestones like the executive order to establish a Strategic Bitcoin Reserve, and said, “Advancements in bipartisan crypto legislation demonstrated progress toward clearer frameworks.”
“The dismissal of the SEC lawsuit against Coinbase marked a major judicial win for balanced, innovation-friendly regulation, and our efforts to make crypto mainstream,” the shareholder letter reads.
Last month, Benchmark Equity Research initiated coverage of the company, assigning a “buy” rating and a $252 price target, an over 25% premium from current prices.
