Coinbase Shares Jump Over 15% After Reporting First Profit in Two Years

The share value of Coinbase Global Inc., the largest U.S. cryptocurrency exchange, surged by over 15% in after-hours trading.

This surge came on the heels of the company’s announcement of its first profit in two years following a robust fourth-quarter performance driven by the rebound in digital-asset markets.

The company reported a 51% increase in revenue to $953.8 million, surpassing analysts’ estimates of $826 million.

Net income for the quarter stood at $273 million, a stark turnaround from the loss of $557 million reported a year earlier.

Analysts had previously forecasted another loss, making the profit announcement a pleasant surprise for investors.

The surge in revenue was propelled by a substantial increase in consumer transaction revenue, which nearly doubled from the third quarter to $492.5 million.

Institutional transaction revenue also more than doubled to  $36.7 million quarter-over-quarter.

Analysts and investors view Coinbase’s return to profitability as a significant milestone, especially amidst the volatility and uncertainties in the cryptocurrency market.

The company’s shares had faced challenges, including a sharp decline of 86% in 2022.

However, the stock surged almost fivefold in 2023, reflecting renewed investor confidence in the company’s long-term prospects.

Coinbase highlighted factors contributing to the market volatility in the fourth quarter, such as excitement surrounding Bitcoin spot ETF approvals and expectations for improving macro conditions in 2024.

The company also expects positive impacts from Bitcoin ETFs on its custodial fee revenue, as it serves as a custodian for several spot Bitcoin ETFs.

Alesia Haas, Coinbase’s Chief Financial Officer, expressed optimism about the company’s growth trajectory, citing plans for a modest increase in headcount to support product growth.

The positive market response underscores investors’ confidence in Coinbase’s ability to navigate the evolving landscape of digital assets while delivering sustainable profitability.