Coinbase Shares Surge After It Crushes Wall Street Expectations

Coinbase (COIN) shares surged after the U.S.-based cryptocurrency exchange beat analysts' estimates for fourth-quarter earnings and revenue, benefitting from soaring crypto prices.

It earned $1.04 per share, beating the average analyst estimate of $0.02 per share, according to FactSet data. Revenue of $953.8 million also exceeded the analyst forecast of $826.1 million, the company said in a statement.

Shares of the crypto exchange rose about 13% in post-market trading after adding about 3% during the regular session. COIN shares had fallen about 4% this year, even as the price of bitcoin BTC$95,226.12 surged about 23%.

"We’re really pleased with the results,” Anil Gupta, vice president of investor relations at Coinbase told CoinDesk in an interview. “Operational rigor that we set forth early in the year really paid off over the course of 2023.”

Read more: Coinbase to Report Strong Earnings, ETF Benefits May Surprise Wall Street, Analysts Say

Crypto prices surged for much of 2023, but the rally intensified in the fourth quarter as high hopes for bitcoin ETFs – which were approved last month – sparked renewed interest in digital assets.

That seemed to translate into more business at Coinbase. It saw 100% more trading volume during the quarter versus the third quarter. Fourth-quarter volume amounted to $154 billion, ahead of the estimate of $142.7 billion.

"The ETFs are really a win-win for Coinbase, I think we’re already starting to see that play out on the platform,” Gupta said. The crypto exchange provides custodial services to 8 out of the ten spot bitcoin ETFs, making it a key player in the business.

"Custody is obviously a relatively small part of the business today but the great news about ETFs is that it’s invigorating the entire sector … so you’re seeing a lot of activity and engagement on the platform,” he said.

Coinbase also posted 2023 adjusted Ebitda of $964 million after previously forecasting "meaningful" positive adjusted Ebitda generation for the year. The company expects to generate about $410 million to $480 million in subscription and service revenue in the first quarter of 2024, after already earnings about $320 million through Feb. 13.

As for the share move, “our stock performance has sometimes been better, sometimes lower, sometimes in line, I think the markets will figure that out,” Gupta said.

Read more: Coinbase Upgraded to Neutral Ahead of Earnings at JPMorgan as Shares Surge

UPDATE (Feb. 15, 22:00 UTC): Adds comments from Anil Gupta, vice president of investor relations at Coinbase.

UPDATE (Feb. 16, 09:23 UTC): Moves share price paragraph higher in the story.