Even though the cryptocurrency exchange reported market-beating results for its fiscal second quarter, shares of Coinbase International Inc fluctuated but ultimately closed flat in extended hours today.
Why does Coinbase inventory seem to be underwhelming after hours?
The inventory is mostly a reaction to a weak patch in transaction income, which came in at $327 million – down nearly 13% sequentially. Additionally, trading volume plummeted to $92 million from $145 million in the previous quarter.
Curiosity revenue, which fell by around 17% on a quarter-over-quarter basis to $201 million, was also unfavorable. In response to the results report, Mark Palmer, a Berenberg analyst, commented in an email:
In Q2, USDC Holdings contributed $151 million in interest income to Coinbase.
Important numbers from the Coinbase Q2 earnings report
lost $79 million compared to last year $390 million.
Additionally, the per-share loss decreased from $1.98 to 34 cents.
Revenue fell by almost 35% YoY to $773 million.
On $628 million in gross sales, consensus predicted a loss of 76 cents.
Revenue from subscriptions and businesses was $335 million.
The SEC filed a lawsuit against Coinbase International Inc. in June, alleging that the company had broken American securities laws (read more).
Are you required to buy Coinbase stock?
Additionally, Coinbase today disclosed in a letter to shareholders that July’s transaction profits totaled $110 million.
The cryptocurrency exchange now projects at least $300 million in subscription and service revenue for the current fiscal quarter. based on Palmer by Berenberg
Take note of Palmer’s $39 value target on Coinbase stock, which signals a more than 50% decline from the current level. In his own words, shares of the cryptocurrency company are not suitable for investment, at least not in the near future.