2024-02-16 02:09:33
Coinbase closed 2023 with profits, exceeding market forecasts. After suffering losses of $2.625 million in 2022, the largest cryptocurrency market in the United States achieved a profit of $95 million last year. It did so despite the drop in its income, which fell 3%, to $3,108 million. Coinbase has capitalized on the rally in digital assets in the fourth quarter. This has allowed it to charge higher brokerage commissions and close the year positively. The firm’s shares have soared around 15% on the stock market outside normal trading hours.
Although the company has returned to profit, it is a long way from recovering the position it had just two years ago, before the cryptocurrency crisis that devastated the FTX market and a few players in the sector. In 2021, Coinbase had revenues of $7,355 million and profits of $3,624 million.
In the fourth quarter, revenue increased 51% to $953.8 million. Net income was $273 million, or $1.04 per share, compared with a loss of $557 million, or $2.46, a year earlier. as Coinbase communicated in a letter to shareholders on Thursday. Analysts had predicted losses.
Consumer transaction revenue rose to $492.5 million, nearly double the third quarter, while institutional transaction revenue more than doubled from the previous quarter, to $36.7 million.
Coinbase says that as of February 13, it has already generated about $320 million in transaction revenue and that it expects first-quarter subscription and service revenue to be between $410 million and $480 million. The price of crypto assets has continued to rise. Technology and development expenses and general and administrative expenses will collectively increase in the first quarter to $600-$650 million, driven primarily by increased stock-based compensation. To this will be added sales and marketing expenses of 85 to 100 million dollars, due to the lower spending on NBA sponsorship throughout the season. “We remain focused on generating positive adjusted EBITDA in all market conditions,” Coinbase says.
In 2024, Coinbase notes that it will focus on three main priorities. First, increase revenue by improving its core operations and the dollar-linked cryptocurrency (USDC) it issues with the financial technology firm Circle. Second, boost the utility of cryptocurrencies with experiments in payments using USDC and Base. Finally, the company wants to promote regulatory clarity for the sector.
“Coinbase is a fundamentally stronger company today than it was a year ago, and we are in a strong financial position to capitalize on the opportunities ahead,” the company says. Coinbase shares have had enormously volatile behavior in the market, reminiscent of cryptocurrencies themselves. In 2022, the price sank 86%, from $252 to $35 per share. In 2023, it multiplied, rising to $174.
The approval by regulators of exchange-traded funds (ETFs) referenced to bitcoin is a threat to Coinbase, since small investors no longer need to go to exchange platforms like theirs to trade that cryptocurrency. But it is also an opportunity, since Coinbase offers custody services in which it charges a commission. The Securities and Exchange Commission (SEC) approved 11 bitcoin spot ETF applications last January, eight of which are associated with Coinbase. In addition, it can popularize investment in cryptocurrencies and end up indirectly benefiting the firm.
The SEC accused Coinbase last June of operating illegally by not having registered and by not having registered the offer and sale of its cryptoasset program as a service. Coinbase is the largest crypto asset trading platform in the United States and has served more than 108 million clients, representing billions of dollars in daily trading volume in hundreds of crypto assets, according to supervisory data.
According to the 101-page SEC complaint, Since at least 2019, Coinbase has made billions of dollars by illegally facilitating the purchase and sale of crypto asset securities. The SEC alleges that Coinbase interweaves the traditional services of an exchange, a broker, and a clearinghouse without having registered any of those functions with the Commission, as required by law.
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