What Happened?
Shares of cryptocurrency exchange Coinbase (NASDAQ:COIN) fell 7.1% in the afternoon session after the company reported fourth-quarter 2024 results with exceptionally high expectations heading into the prints, making it hard for the stock to maintain its positive momentum after the results were released.
The quarter itself was fine, as Coinbase blew past analysts' revenue, EBITDA, and EPS expectations. Specifically, its subscription and services revenue, which is less volatile than transaction revenue, clocked in at $641 million vs management's guidance of $543 million at the midpoint ($580 million at the high end of the range). However, given the impressive growth prints recorded by a peer, Robinhood, earlier in the week, Coinbase had a lofty bar to clear, and the results paled compared to this benchmark from the market's perspective. Zooming out, this quarter featured some important positives, but the high expectations are weighing on the stock.
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What The Market Is Telling Us
Coinbase’s shares are extremely volatile and have had 73 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 3 months ago when the stock gained 28.6% as stocks rallied as Republican party candidate Donald Trump was declared the winner of the 2024 US presidential election. The market was trying to assess the impact of some of the anticipated changes under the new administration, mostly relating to trade decisions that affect semiconductor and defense stocks, regulatory measures in the crypto and energy industries, and the broader impact of new measures on key economic indicators tracked by the Fed, notably inflation.
After the election was called, Bitcoin hit a new all-time high, pushing past the critical $75k mark. The market reaction suggests investors were anticipating favorable measures. This justified reaction follows recent comments by Donald Trump as he pledged to make the United States the "Bitcoin superpower" of the world.
Coinbase is up 8.3% since the beginning of the year, but at $278.59 per share, it is still trading 18.9% below its 52-week high of $343.62 from December 2024. Investors who bought $1,000 worth of Coinbase’s shares at the IPO in April 2021 would now be looking at an investment worth $848.64.
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