Coinbase’s Q4 results are good, but it warns that Q1 trading volume is reduced, and after-hours decline

Coinbase, a well-known cryptocurrency exchange, released its latest financial report after the US stock market on the 24th. Both revenue and profit were better than market expectations, but it warned that trading volume in the first quarter would decline. Shares of Coinbase fell more than 5 percent in after-hours trading that day.

According to the financial report released by Coinbase, revenue in the fourth quarter of 2021 jumped to $2.5 billion, compared with $585.1 million in the same period of 2020, which was higher than the $1.94 billion expected in a Refinitiv survey; net profit soared to $840.2 million from $176.8 million in the same period of 2020 $3.32 per diluted share, also beating the Wall Street consensus estimate of $1.85.

Coinbase’s revenue and profit performance are highly dependent on the popularity of the cryptocurrency market. As of the fourth quarter of 2021, Coinbase Verified Users (Verified Users) increased to 89 million, and Monthly Transacting Users (MTU) reached 11.4 million, a significant increase from 7.4 million in the third quarter.

Coinbase’s revenue mainly comes from transaction fees, unlike stock brokers who can earn interest income through user account balances, so MTU is an important indicator to observe Coinbase’s operations.

According to Coinbase’s earnings report, bitcoin accounted for 16% of total trading volume in the fourth quarter, ethereum accounted for 16%, and the remaining 68% came from other crypto assets, up from 59% in the third quarter.

Looking ahead to the first quarter of 2022, Coinbase forecasts that MTU and trading volume will be lower than in the fourth quarter of 2021, citing weakness in the cryptocurrency market, which has plunged 20% so far in the first quarter, mainly due to geopolitical tensions, coupled with the U.S. The Federal Reserve (Fed) released a hawkish signal, causing the prices of cryptocurrencies such as Bitcoin to dip.

According to Yahoo Finance’s quotation, Coinbase’s stock price rose 3.95% in normal trading on the 24th to close at $179.56, and fell 5.83% to $169.10 after the market.