Wednesday, December 8

Coinbase loses 1.4 million clients with bitcoin and ethereum at highs

Coinbase, the first major cryptocurrency broker to make the jump to Wall Street, lost 1.4 million clients last quarter. And it did so just as bitcoin and ethereum were heading toward all-time highs.

The company posted revenue of $ 1.24 billion in the third quarter, compared to $ 1.57 billion expected by the analyst consensus. And it paid for these figures with falls of more than 10 percent in the New York Stock Exchange.

Guided by its mobile app downloads, many analysts did not expect this spurt in revenue or this loss of users, further amplifying the punishment for Coinbase.

The company struggled to cushion the blow, after informing its shareholders that market conditions began to improve in the last quarter.

Coinbase, no visibility amid the euphoria

The problem is that the broker barely has visibility at a time of peak crypto euphoria.

“The figures not only seem bad, they are,” said Chris Brendler, an analyst at Davidson & Co. “The problem is that people want to know what will happen in the next quarter,” said this expert.

Visibility was lacking because they punctured all the important customer segments. Thus, the retail operations registered a volume of 93,000 million dollars, 36 percent less than in the previous quarter.

But the activity of institutional investors also deflated, reaching 234,000 million dollars, 26 percent less than the previous quarter.

Coinbase’s retail clients falter

Precisely, the activity of retail clients was one of the reasons that justified the sharp falls in the stock market of Coinbase, along with the failure to meet income expectations.

“The Coinbase sell-off” seemed to be driven primarily by its estimates versus consensus, and perhaps concerns about a sequential decline in the retail buying rate, “said Mark Palmer, an analyst at BTIG.

“Drastic decline” in the retail purchase rate that caused a loss of revenue close to 20 percent, so called the prick Mizuho analyst Dan Dolev, adding that it is one of the worst records in Coinbase’s short history.

On the bright side, Piper Sandler analysts spotted one of the company’s few green shoots, the highest subscription and service revenue. In his opinion, revenue should improve in the last quarter.

The hope of the NFT market

Despite the crash and the flight of retail customers, Coinbase executives were reasonably optimistic about the future and trusted the recovery in the development of new products, such as the non-fungible token (NTF) market.

“We are very excited about NFTs, this will be a very large area for cryptocurrencies in the future, and it already is today,” said Coinbase CEO Brian Armstrong.

In fact, it is a very lucrative market that is in full expansion and according to the company’s estimates, it could become as large or more than the cryptocurrency market itself.

Collection of benefits

It is also true that Coinbase reached these results after reaching its all-time highs last Tuesday, so investors took advantage of the news to reap benefits.

Since it debuted on Wall Street, the stock has risen more than 40 percent in the stock market. But Coinbase’s figures reflect the flight of retail clients in the midst of crypto euphoria, which in part justified the punishment of the listing on the New York Stock Exchange.

69 percent of analysts who follow Coinbase continue to recommend buying, while 20 percent choose to hold and only 11 percent bet on selling.

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