What's going on?
Coinbase reported its first quarterly results on Friday since hitting the US stock market last month, and the crypto exchange teased even better things to come.
What does this mean?
Whoa mama: Coinbase’s revenue more than tripled from the quarter before and surged almost tenfold from the same time last year. That led to a 300% uptick in the company’s profit from the quarter before. Still, it shouldn’t exactly be a shock: crypto prices have been booming, and investors have been tripping over themselves to trade the digital rascals on Coinbase’s platform. So many investors, in fact, that its total number of monthly active users more than doubled from the quarter before – from 2.8 million to 6.1 million.
Why should I care?
Zooming in: Where bitcoin goes, Coinbase follows.
Coinbase makes almost all its revenue from trading fees, and since most of those trades are in bitcoin, the company’s success is closely linked to that of the OG crypto. So it can’t have gone down well when bitcoin’s price tanked the day before its earnings announcement, right after Tesla announced that it’d stop accepting the crypto as payment. The EV-maker’s Technoking cited environmental concerns, and he’s not wrong: bitcoin mining uses more electricity than most countries do (tweet this). And if other eco-conscious companies make the same pledge, bitcoin – and by extension Coinbase – could well take another tumble.
For markets: Such cryptocurrencies. Very competition.
Coinbase’s stock is down more than 30% from the peak it hit on its first day of trading, but it’s not all down to Elon’s tweets. Coinbase has also been facing increased competition from platforms that offer a more diverse range of cryptocurrencies. Cryptocurrencies like dogecoin, the meme-inspired former joke that’s up almost tenfold in the last three months. So now Coinbase wants in: the firm said on its earnings call that it finally plans to list dogecoin in the next two months. So wow.