01.08.2025 23:37

Coinbase's stock plummeted eleven percent in pre-market trading following the release of its second-quarter financial results, which significantly missed analyst expectations. The company reported total revenue of $1.5 billion, a substantial 26% decrease compared to the previous quarter. This shortfall primarily stemmed from considerably weaker-than-anticipated transaction revenue.

Transaction revenue experienced a dramatic 39% quarter-over-quarter decline, falling to $764 million. Adding to the disappointing figures, subscription and services revenue also dipped, decreasing by 6% to $656 million. Although Coinbase implemented cost-cutting measures, operating expenses still increased by 15%, reaching $1.5 billion, largely due to a $307 million expense related to a May data breach.

While Coinbase reported a net income of $1.4 billion, this figure was significantly inflated by $1.5 billion in pre-tax unrealized gains from strategic investments, including in Circle, and a $362 million pre-tax gain from its cryptocurrency investment portfolio. A more accurate picture is presented by the adjusted net income, which amounted to a mere $33 million, with adjusted EBITDA at $512 million.

The company's trading activity significantly lagged behind the broader cryptocurrency market. Global and US crypto spot volumes decreased by 31% and 32%, respectively, while Coinbase's total trading volume plummeted by 40% to $237 billion. The consumer segment experienced an even more substantial decline, with a 45% drop to $43 billion, resulting in a 41% fall in consumer transaction revenue to $650 million. This downturn was attributed to a shift towards simpler trades amidst low market volatility. Institutional transaction revenue mirrored this trend, showing a similar 38% decrease in both volume and revenue. Despite growth in Base Chain activity, other transaction revenue fell 21%, impacted by a decrease in average revenue per transaction.

Before the earnings announcement, Coinbase shares closed at $377.76. However, the pre-market trading revealed a sharp investor backlash, with the stock price plunging $42.30 to $335.46, reflecting significant concerns over the company's performance and future prospects. This substantial drop underscores the market's negative reaction to the disappointing financial results and the challenges Coinbase faces amidst a weakening cryptocurrency market.