Coinbase exceeded Wall Street expectations for fourth-quarter profit on Thursday (Friday AEDT) amid a surge in crypto trading volumes fuelled by post-election optimism.
The company reported earnings of $4.68 per share, significantly surpassing analyst forecasts of $2.11 per share and surging from $1.08 per share in the same period a year ago.
Revenues came in at US$2.27 billion versus $1.84 billion expected, well above the $953.8 million reported in the same period last year.
The company noted in its letter to shareholders, “The majority of the Y/Y growth in Trading Volume was driven by higher levels of Crypto Asset Volatility - particularly in Q1 and Q4 - as well as higher average crypto asset prices.”
This was driven by the launch of the Bitcoin ETF products in Q1’24, and the election of a pro-crypto President and Congress in Q4’24 and the "associated expectation of regulatory clarity".
The company also noted, “Our investments in products like Coinbase One, improving the core trading experience, and listing more assets helped drive revenue growth, while USDC rewards on self-custodial wallets, and more recent innovations such as Bitcoin-backed loans, showcase the power of onchain finance.”
Transaction revenue was reported at $1.56 billion, while total trading volume came in at $439 billion, up 185% year-over-year.
Consumer trading volume rose 224% from the same period a year ago while institutional trading volume increased 176%.
The crypto rally was driven by heightened investor interest following Donald Trump’s election victory, which sent Bitcoin soaring past US$100,000. Market optimism stemmed from expectations of more crypto-friendly policies under the new administration.
Trump has pledged to make the U.S. the "crypto capital of the planet", and his nominee for SEC chair, Paul Atkins, is seen as a strong supporter of the industry - a stark contrast to former Chair Gary Gensler, who likened the sector to the "Wild West".
The broader crypto market rally also benefitted competitors. On Wednesday, Robinhood reported a 115% increase in revenues, driven by heightened trading activity in digital assets.
At the time of writing, Coinbase Global (NASDAQ: COIN) stock was trading at US$298.52, up 0.1% from Thursday's close of $298.11. The stock reached a day low of $282.5 and a day high of $302.4. Coinbase Global's market cap stands at US$74.63 billion (A$118.11 billion).
