Coinbase Revenue Drops 75%: Analysts Expect Steep Decline in Q4 Profits

Coinbase Revenue to Drop 75%

• Wall Street analysts expect Coinbase’s revenue to drop by more than 75% in the fourth quarter of 2022 compared to the same period in 2021.
• The exchange is estimated to post a loss of $568.1 million for the quarter and its total assets are expected to come in at $88.8 billion, the lowest amount in more than two years.
• Analysts for JPMorgan and D.A. Davidson have downgraded Coinbase’s stock from Buy to Neutral due to mounting regulatory pressure and dwindling user trust in centralized crypto platforms.

Impact of Regulatory Clampdown on Coinbase

The steep decline in Coinbase’s revenue for the last quarter of 2022 can be attributed mainly to plummeting crypto prices as well as waning user trust in centralized crypto exchanges following the collapse of FTX, once the third-largest exchange globally. In response, analysts from JPMorgan and D.A. Davidson have downgraded Coinbase’s stock from Buy to Neutral, citing regulatory pressure as their main concern that could further impact their earnings moving forward. Furthermore, S&P Global had previously downgraded the platform’s debt one position from “BBB” to “BB-” earlier this year, making it classified as “speculative grade” instead of “investment grade”.

Coinbase Stock Performance

Amid a rebound in crypto prices, shares of Coinbase rallied early 2023; up 82.55% year-to-date since it started trading publicly on April 14th 2021 . However, over the past year, its stock has lost around two-thirds of its value despite record high trading volumes that surged over 600% between 2020 and 2021 respectively .

Revenue Sources for Coinbase

Wall Street analysts predict that Coinbase will bring in a total of $235.4 million from subscriptions and services – accounting for 40% of its total revenue – which was less than 10% during the same quarter last year . Nevertheless , other sources such as custody fees , stablecoins , staking rewards , and merchant transactions are still expected to generate significant amounts of income for the company moving forward .

Conclusion

In conclusion , while clear regulation is beneficial for both Coinbase and other exchanges alike , regulatory clampdowns could negatively affect their earnings moving forward . Despite seeing an uptick recently , Coinbas e ‚ s stock has dropped significantly over the past year due backing away investors due t o uncertainties surrounding regulation s . Nonetheless , there are still plenty of opportunities available through various sources such as subscription services a nd transaction fees among others that could potentially help bolster their financial performance