Coinbase stock fell 10% today after a disappointing earnings report for the second half of the year. After hours trading, it dropped by over 4%.
Coinbase’s Q2 revenue was $808.3 million, compared with an expected $832.2 million from the exchange.
The platform saw 9 million transactions, a decrease of 200,000 in the last three months. Coinbase saw a similar increase in users than the quarter one year ago, with an additional 200,000 active users per month.
In the last quarter of fiscal year, Coinbase suffered net losses of 1.1 billion. This is its second consecutive quarter with negative income. Coinbase’s Q2 net income was 1.6 billion. Coinbase’s income comes from fees that users pay when they trade Bitcoin or other cryptocurrencies. The exchange saw a 29% drop in trading volume during Q2.
Coinbase was the first cryptocurrency exchange to be publicly traded on Wall Street. Its stock price rose to $342 at one time, but it is now down 74% to just under $87 per share as of this writing.
Coinbase had announced in April that it would offer its services to Indian investors. After being criticized by an Indian regulator, Coinbase drastically reduced its trading services within a week. Anil Gupta, Coinbase Vice President for Investor Relations, stated that India is a large market and that the company is excited about the potential opportunities.
The Securities and Exchange Commission (SEC), gave Coinbase permission to go public last January, but the agency found that the firm was within its sights late last week. While the SEC asserts that nine tokens listed on the exchange are unregistered securities and Coinbase insists that it doesn’t sell any securities,
Gupta stated that “We remain committed towards being the most trusted and most compliant crypto company out there,” Decrypt. He said that Coinbase had “pushed for regulatory clarity” when asked about the impact of the SEC’s decision on future listings.
The SEC made its decision in insider trade charges against three people, including a former Coinbase manager who had prior knowledge about tokens that would be traded on the exchange. Cathie Wood, Ark Invests CEO, stated that the “regulatory uncertainty” that followed was so intense that had to part with $75,000,000 worth of Coinbase shares.
“Once this was discovered, we immediately conducted an inquiry, we found out what had been going on, and we provided information to law enforcement. It’s a stern warning that this kind of behavior is unacceptable,” Gupta stated to Decrypt. He was referring to the illegal insider trading charges. “We must do all we can to eliminate this kind of activity and ensure it doesn’t happen.”
Coinbase’s stock price rose sharply last week after it announced that it had signed a agreement with Blackrock. This is the largest asset manager in the world. Coinbase will offer institutional investors access to cryptocurrency trading technology through its Aladdin platform.
