Coinbase turns losses into profits, with first-quarter earnings per share of $4.40 exceeding market expectations

According to the financial news app Smart Finance, Coinbase (COIN.US) released its first-quarter financial report for 2024. The report shows that Coinbase's first-quarter revenue was $16.4 billion, higher than the analysts' average expectation of $13.4 billion; earnings per share reached $4.40, compared to the market expectation of $1.09. As a major digital token trading platform in the United States, Coinbase's net profit was $11.8 billion, or $4.40 per share, a significant financial turnaround compared to a loss of $78.9 million, or a loss of 34 cents per share, in the same period last year, following the company's first profit announcement in two years in February this year.

It is worth noting that this quarter's profit includes a $650 million gain from the valuation of investment crypto assets held due to the adoption of new accounting standards.

In terms of business types, consumer trading revenue was the main source of revenue for Coinbase this quarter, reaching $9.35 billion, an increase of over 100% compared to the same period last year, with total trading revenue almost doubling to $10.8 billion from the same period last year.

Additionally, subscription and service revenue reached $5.11 billion this quarter. Hosting revenue in the first quarter rose to $32.3 million, nearly doubling from the same period last year. Coinbase reportedly provides bitcoin custody services to 8 out of 11 bitcoin ETF issuers. Other revenue, including company interest, recorded $49.89 million in the first quarter, a 38% year-on-year increase.

Prior to the report's release, Coinbase's stock price rose nearly 9% in Thursday's trading. Following a nearly fivefold increase in stock price in 2023, the stock has risen by about 32% so far this year. The company's stock growth has benefited from the significant increase in bitcoin prices, as the increase in cryptocurrency value typically drives trading volume growth and increased demand for other services.

In the first quarter of 2024, bitcoin prices hit a historical high of over $73,000 in March, while Ethereum, as the second largest digital asset, also experienced its first major upgrade in over a year.

Furthermore, since the approval of a series of new U.S. spot bitcoin exchange-traded funds by the U.S. Securities and Exchange Commission, there has been a significant influx of institutional investors. Many exchange-traded funds have chosen Coinbase as their custody partner, attracting over $50 billion in funds by the end of the first quarter.

Benefiting from the stimulus of ETF issuance on trading activity, as a custody partner for exchange-traded funds, Coinbase Prime saw record trading volume in the first quarter, increasing by 115% year-on-year to 312 billion times, with first-quarter revenue soaring from $22.3 million in the same period last year to $85.4 million, and loans surging to $797 million in the same period However, Coinbase also faces some challenges. Analysts at Raymond James pointed out that with the decline in the price of Bitcoin, the inflow of funds peaked on April 8th and began to decrease.

In addition, Coinbase is also involved in a legal battle with the U.S. Securities and Exchange Commission (SEC), which has accused Coinbase of engaging in unregistered securities sales. Meanwhile, competition from emerging competitors such as Crypto.com is intensifying.

The stock selling behavior of insiders has also attracted market attention. According to a report by Raymond James analysts, including several senior executives, multiple Coinbase insiders sold stocks worth $383 million in the first quarter, marking the largest insider sale since the company went public on Nasdaq in 2021. Co-founder and board member Fred Ehrsam netted $129 million through stock sales