Coinbase Earnings Pressure
Coinbase stock hits 52-week low as Q2 misses expectations despite diversification efforts.
Anonymous
Key Points
1
Coinbase has posted its 14th consecutive quarter of positive EBITDA, signaling ongoing profitability despite revenue softness.
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Services revenue is approaching 50% of total revenue, underscoring a shift toward higher-margin offerings beyond spot trading.
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Coinbase is expanding into derivatives via a Kalshi partnership to offer perpetual cryptocurrency futures through U.S. exchanges.
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CEO Brian Armstrong said sales have decoupled from Bitcoin trading fees, noting that about 88% of net revenue now comes from non-spot activities.
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Spot trading volumes fell, with a 38% drop contributing to weaker transaction revenue and ongoing earnings pressure.
Coinbase stock plunged to a 52-week low of $139.15 on July 31 after the company missed Wall Street's Q2 revenue expectations, according to Crypto News. The crypto exchange reported $1.22 billion in quarterly revenue and a net loss of $359.5 million, or $1.36 per share — its third consecutive quarterly loss.
The sell-off was swift and steep. Yahoo Finance reported shares dropped as much as 11.8% on the day, with some trackers citing a fall closer to 13.9% from prior levels. The results landed as broader crypto markets weakened and trading volumes dried up across the industry.
A 38% Drop in Spot Trading Crushed Q2 Revenue
The biggest culprit behind the miss was a sharp fall in spot trading. Spot trading volumes dropped 38% during the quarter, gutting transaction revenue. Crypto markets broadly weakened, pulling activity off exchanges and squeezing the fees Coinbase earns on each trade.
Despite the pain, Coinbase posted its 14th straight quarter of positive adjusted EBITDA — a measure of core profitability. That streak signals the business is not collapsing, even as headline numbers disappointed. Analysts largely blamed macro conditions and weak crypto prices rather than anything broken inside the company.
CEO Says 88% of Revenue Now Comes From Non-Spot Sources
CEO Brian Armstrong made a striking claim on the earnings call. He said about 88% of Coinbase's net revenue now comes from activities other than spot trading. That is a major shift for a company once almost entirely dependent on crypto buy-and-sell fees.
Services revenue is now close to 50% of total revenue. That includes stablecoins, custody, and data products — all higher-margin offerings. Armstrong argued that sales have "decoupled" from Bitcoin trading fees, pointing to the diversification as a sign of long-term resilience.
Coinbase Grabs Record Market Share Even as Volume Falls
Here is the odd bright spot: even as overall crypto trading fell, Coinbase grew its slice of the pie. The company's U.S. spot trading market share hit a record 10.3% during Q2. That means it is winning business from rivals even in a down market.
Coinbase is also moving into derivatives — contracts that let traders bet on future crypto prices. The company announced a partnership with Kalshi to offer perpetual cryptocurrency futures through U.S. exchanges. Derivatives are a massive global market, and tapping it could add a significant new revenue stream.
Regulatory Costs and Weak Outlook Keep Investors Cautious
Regulatory uncertainty continues to hang over Coinbase. Legal and compliance costs remain high as the company navigates an unsettled U.S. regulatory environment. Those costs weigh on margins even as the core business holds up. Trading Key noted the company issued a cautious outlook for the rest of the year.
Technically, the stock sits below its key moving averages — a sign traders see more downside risk. Investors will be watching whether new product bets like derivatives and stablecoin services can replace lost spot trading revenue. The next few quarters will test whether Coinbase's pivot to diversified revenue can survive a prolonged crypto winter.
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