Although the revenue released by Coinbase beats analysts’ projections, Coinbase still recorded a $2.6 billion loss in 2022 amid last year’s prolonged crypto winter.
Coinbase fourth-quarter earnings were released on Tuesday and the report however ended up leaving investors and analysts in shock.
As opposed to the projection of analysts, Coinbase reported a net revenue of $605 million, meanwhile, analysts projected $588 million.
Looking at the above report, the crypto exchange Coinbase revenue appears profitable because of the difference in the reported revenue vs projected revenue but no! This is because when we compare the latest net revenue to the same period of 2021 (fourth quarter), there is about a 76% drop and also around a 57% decrease compared to the 2021 full-year net revenue.
Coinbase shareholder in a letter blamed the net revenue drop in 2022 on the difficult year as well as the overall trend in the crypto industry as the entire crypto market cap plunged by 64% (or $1.5 trillion) last year, which eventually lead to total trading volume on Coinbase platform dropping by 50% compared to 2021.
“To state the obvious, 2022 was a challenging year for crypto market and our transaction revenues,” Coinbase wrote in its shareholder letter.
Additionally, Armstrong’s Coinbase reported some positive development in the company which comprises a partnership with a leading company Blackrock and also increased trading volume as compared to 2020, also about 25% of the leading hedge funds have been onboarded with Coinbase.
Furthermore, when compared to 2022 previous quarters, the fourth quarter performed better, the company recorded a 5% increase even though it was during this period that the crypto industry witnessed a sudden collapse of crypto exchange FTX, a major competitor of Coinbase, this collapse however, affected the entire crypto market as the industry witnessed a significant drop in the entire crypto market cap.
Also, Coinbase reported a significant interest income last year, $182.2 million vs $102.8 million in 2021, this may be due to the exchange’s lucrative partnership with the USDC issuer Circle, both Coinbase and Circle shared the revenue both parties generated from the stablecoin USDC.
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