Coinbase Q2 Lands With a $1.36 Thud — Bulls Still Buy the Dip 📉

Coinbase (COIN) reported $1.22 billion in second-quarter revenue on Thursday, down 14% from the prior quarter and roughly 19% from $1.5 billion a year earlier, missing Wall Street consensus of $1.29 billion and triggering an after-hours share drop of about 5%. The company posted a net loss of $359 million, equating to a loss per share of $1.36, well below the roughly break-even result analysts had modeled. Total crypto spot trading volume declined more than 20% quarter over quarter as digital asset prices slid and volatility hit multi-year lows, dragging transaction revenue down 21% to $599 million, short of the $628 million consensus. Subscription and services revenue totaled $555 million versus expectations of $599 million, with Coinbase blaming late-closing USDC commercial agreements and lower staking revenue tied to falling crypto prices. Coinbase added 819 BTC to its balance sheet during the quarter, lifting holdings to 17,211 BTC, a 5% quarter-over-quarter increase. Bitcoin (BTC) ended the quarter around $64,714.55 after falling roughly 14% in Q2, while ether (ETH) lost about 25%.

Chief Executive Brian Armstrong, in a post on X, pointed to the company's expansion beyond spot trading into stablecoins, Base and prediction markets, noting Coinbase captured a record 10.3% share of global crypto trading volume during the quarter, its third consecutive quarter of market-share gains, with 88% of net revenue now coming from sources other than Bitcoin spot trading versus 45% in Q2 2020. Chief Financial Officer Alesia Haas said industry spot trading volumes fell more than 20% and total crypto market capitalization declined by double digits, conditions she tied to a 14% quarter-over-quarter decline in total revenue and $208 million in adjusted EBITDA. Stablecoin revenue reached $292 million, with average USDC held across Coinbase products at a record $20 billion, more than 30% of USDC in circulation. Prediction-markets revenue grew 106% from the prior quarter and crossed a $100 million annualized net revenue run rate. Coinbase added 814,000 Class A shares to its buyback count in Q2, bringing year-to-date repurchases to nearly 7 million shares for $1.2 billion and leaving about $2 billion remaining under its authorization, with the quarter ending in $8.6 billion in cash and cash equivalents and $10 billion in total available resources.

Bitcoin treasury firm Strategy (MSTR) also missed, posting Q2 revenue of $122 million versus estimates of $124.48 million and a loss per share of $24.45 against consensus EPS of $3.07, with shares slipping less than 1% in after-hours trading near $97. Robinhood (HOOD), reporting Wednesday, said its crypto trading revenue fell 38% year over year to $100 million from $160 million. Wall Street firms including Benchmark, Needham, Rosenblatt, Baird, Mizuho, Barclays and Bernstein revised price targets after the print, with Benchmark cutting to $230 from $270, Needham to $177, Rosenblatt to $200, Baird to $130, Mizuho at $155 and Barclays at $95 with an Underweight rating, while Bernstein held $330 and Citizens held $325; most firms kept Buy ratings, with Cantor Fitzgerald calling the quarter "another soft quarter" driven by depressed crypto prices. Through July 26, Coinbase reported roughly $130 million in transaction revenue for the third quarter to date and guided subscription and services revenue between $500 million and $580 million.