Coinbases Q3 Revenue and Profit Fall Short of Expectations Why the PostElection Industry Outlook Remains Bright

What Happened?
The largest cryptocurrency exchange in the United States, Coinbase, announced its financial results for the third quarter of 2024 along with a shareholder letter, revealing a less than ideal financial performance, with both revenue and profit falling short of market expectations.
In the shareholder letter, Coinbase expressed an optimistic attitude towards the promotion of crypto-friendly legislation in the new Congress and emphasized that the company is willing to collaborate with the new government regardless of whether the Democrats or Republicans win.
Coinbase believes that the cryptocurrency policy positions of both Vice President Kamala Harris and former President Donald Trump have evidently become more favorable, suggesting that there may be more regulations beneficial to the crypto industry in the future.
Revenue and profit for the third quarter fell short of expectations, leading to a decline in Coinbase’s stock price.
Coinbase announced its total revenue for the third quarter was $1.2 billion, slightly below Wall Street analysts’ expectations of $1.26 billion, causing the company’s stock price to drop nearly 7% in after-hours trading.
Coinbase’s primary source of income is transaction fees; however, the total trading volume on Coinbase saw a significant decrease due to a decline in market trading activity, dropping 27% compared to the second quarter.
The company indicated that the primary reason for the decline in trading volume at U.S. exchanges was the weak market conditions. Nevertheless, Anil Gupta, Vice President of Investor Relations at Coinbase, stated that despite the drop in trading revenue, Coinbase remains optimistic about the company’s overall performance.
Additionally, Coinbase’s board approved a stock repurchase program of up to $1 billion in October. The company will buy back shares based on market conditions, with a maximum repurchase of $1 billion without expiration.
Despite the challenges posed by fluctuations in trading revenue, Coinbase remains committed to diversifying its business and has launched several new projects. Recently, Coinbase introduced a new feature allowing Visa debit cardholders to quickly transfer funds to their Coinbase accounts.
Furthermore, Coinbase is also venturing into asset custody services and the tokenization of real-world assets (RWA) to expand revenue sources and reduce reliance on trading volume.
Coinbase Actively Promotes Crypto-Friendly Policies, Optimistic About U.S. 2024 Election Results
In the shareholder letter released on October 30, Coinbase stated that regardless of whether Democratic candidate Kamala Harris or Republican candidate Donald Trump wins the presidential election, it is “prepared to work with any administration in the United States” and anticipates providing further recommendations to enhance regulatory clarity for the cryptocurrency industry when the new Congress takes office in January 2025.
“Presidential candidates and both parties have taken a more favorable stance towards cryptocurrencies, which marks a significant shift compared to previous years,” Coinbase added. “Despite opposition from the White House, recent bipartisan legislation has passed to support cryptocurrencies, indicating that support for cryptocurrencies has grown increasingly louder.”
Coinbase CEO Brian Armstrong expressed high expectations regarding this matter, noting that “the next administration, regardless of party affiliation, could bring a positive development environment for the crypto industry.”
He also reiterated that the company will continue to support pro-cryptocurrency candidates through its political action committees (PACs) “Fairshake” and “Stand With Crypto,” committing an additional $25 million to Fairshake, bringing the total contributions to $50 million when combined with previous donations.
Reference:
coindesk,
cointelegraph