Coinbase Announces Strong Q1 2024 Results, COIN Stock Jumps 9%

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As a seasoned crypto investor with a few years under my belt, I’m always keeping a close eye on the latest developments in the industry. And let me tell you, Coinbase’s Q1 2024 earnings report was nothing short of impressive. The revenue and earnings per share far surpassed analysts’ expectations, fueled by strong consumer transaction revenue and mark-to-market gains on cryptocurrency assets.

As an analyst, I was taken aback by Coinbase Global Inc’s (NASDAQ: COIN) unexpectedly strong Q1 2024 results announcement on May 2. The company surpassed expectations with a reported revenue of $1.64 billion, significantly higher than the anticipated $1.34 billion. Additionally, their earnings per share came in at an impressive $4.40, far exceeding the analysts’ estimate of $1.09.

In Q1, Coinbase reported earnings with approximately $650 million from realizations on their cryptocurrency assets, used for investment purposes, marked at current market value. Impressively, consumer revenue hit $935 million, representing a 100% increase compared to the same period last year. Furthermore, total transaction revenue surged to an astounding $1.08 billion – nearly tripling the previous figure.

Coinbase’s overall revenue has significantly benefited from transaction revenue for some time. Notably, subscription and services revenue reached an impressive $511 million in the first quarter alone.

Following the Thursday announcement, Coinbase (COIN) shares experienced a significant surge, rising by approximately 9% and concluding the day at around $228. A positive sign emerged as the COIN stock managed to finish above its 50-day moving average of $219, thereby decreasing the likelihood of near-term pessimism.

The price of COIN has surged by 32% this year, primarily due to Bitcoin‘s robust rally during the first quarter of 2024. This price surge can be attributed to increased trading volumes and heightened demand for Coinbase’s other services as a result. Furthermore, the US Securities and Exchange Commission (SEC) granted approval for spot Bitcoin Exchange-Traded Funds (ETFs), leading to a substantial influx of institutional investors in the market.

Q2 Can Be a Bit Challenging for Coinbase

Raymond James analysts observed that the total amount of money flowing into bitcoin reached its highest point on April 8, but this inflow has since diminished, aligning with a drop in bitcoin’s price.

Analysts noted that the price of Bitcoin reached its highest point when the rate of purchases slowed, followed by a gentle decline starting around mid-March. Notably, transaction activity on Coinbase’s exchange has dropped significantly compared to early March.

In Q1 2024, numerous Coinbase insiders, including four executive-level personnel, collectively offloaded $383 million in company shares according to Raymond James analysts’ findings. This amount exceeded the previous quarter’s sales and represented the most significant insider selling activity since Coinbase’s Nasdaq listing in 2021.

The second quarter is currently on track to be less robust than the first, as indicated by a potential decrease in demand from our key retail and individual investor customer base in Coinbase. This trend is becoming increasingly apparent to investors, resulting in a noticeable downturn in COIN’s stock value over the past weeks of April.

Coinbase has been involved in an ongoing legal dispute with the Securities and Exchange Commission (SEC). The SEC alleges that Coinbase functions as an unregistered broker.

“Our objective is clearness, and the court’s ruling keeps us headed in that direction. We remain assured by the merits of our legal case and are well-prepared for an extensive discovery process that will last through the rest of the year.”

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2024-05-03 10:30