Crypto Giant Coinbase In The Red: Q1 Losses Mount As COIN Slides 5%

On Thursday, crypto exchange Coinbase (COIN) disclosed its first-quarter (Q1) results, which had impact on its stock valuation. COIN shares ended the session down around 5% at $192 per share following the company’s earnings report. 

This marked the second consecutive quarterly loss for the exchange, although the quarter itself was characterized by extreme conditions, including major volatility spikes and a 50% decline in Bitcoin’s (BTC) price from its all-time highs.

Macro Headwinds Hit Coinbase

For the quarter, Coinbase posted a net loss of $394.1 million, or $1.49 per share. This compared with a profit of $65.6 million, or $0.24 per share, in the year-ago period. 

The company also reported weakness in areas tied to its trading ecosystem. Revenue from the subscription and services unit—which includes businesses outside of trading—fell 13.5% to $583.5 million in the first quarter. 

Overall earnings before certain adjustments were made, as measured by adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA), dropped to $303.3 million, down from $929.9 million a year earlier.

Trading-related revenue declined as well. Coinbase said transaction revenue fell 40% year-over-year to $755.8 million. It also recorded a loss on crypto assets held for investment, reporting a loss of $482.4 million on those crypto assets, compared with a loss of $596.7 million in the prior year. 

Overall, Coinbase pointed to broader market pressure as a major driver of the results. “Macro conditions were genuinely tough. Total crypto market cap and total crypto trading volume were both down more than 20% quarter-over-quarter,” said Chief Financial Officer Alesia Haas during the earnings call.

All-Time Highs In Trading Mix

Even with those headwinds, Coinbase highlighted several areas where it gained traction. The company said its crypto trading volume market share rose to 8.6%, a new all-time high. The company also said it continues to hold more crypto than any platform in the world, securely storing 12% of global crypto assets. 

It further pointed to rapid growth in derivatives activity: Coinbase derivatives trading volume grew 169% year-over-year, driven by broader consumer and institutional participation. 

The exchange also noted that retail derivatives surpassed $200 million in annualized revenue, which it described as a new all-time high. In addition, Coinbase said its prediction markets reached $100 million in annualized revenue in March, after the US launch.

In the company’s commentary, Coinbase’s co-founder and CEO Brian Armstrong said the business executed well within the factors it could control. He pointed to “huge growth in derivatives trading volume” tied to what Coinbase calls its “Everything Exchange strategy.” 

Featured image created with OpenArt, chart from TradingView.com