Coinbase falls 11% after the crypto exchange misses Wall Street's 3rd-quarter earnings expectations

• Coinbase stock slipped 11% after reporting third-quarter earnings that missed Wall Street's expectations.
• And despite listing popular memecoins like dogecoin and shiba inu, trading volume still fell.
• The exchange blamed lower market volatility and weaker crypto prices.

Coinbase Global stock slipped 11% Wednesday after the largest cryptocurrency exchange in the US reported third-quarter earnings that missed Wall Street's expectations.

Here are the key figures:

Revenue: $1.31 billion versus $1.61 billion estimated by FactSet

EPS: $1.62 a share versus $1.81 estimated by FactSet

The exchange also saw its trading volume suffer a steep drop, driven primarily by lower levels of volatility, the company said.

Despite listing popular meme tokens like dogecoin and shiba inu, trading volume fell to $327 billion in the third quarter from $462 billion in the previous quarter. The results cover the three-month period that ended September 30, just missing shiba inu's massive rally in October.

But Coinbase's letter to shareholders said "market conditions improved meaningfully later in the quarter which we have continued to see into early" into the fourth quarter. Led by bitcoin and ether, cryptos have hit record highs this week aided by a weaker dollar and upbeat investor sentiment.

And FTX founder and CEO Sam Bankman-Fried on Twitter said the exchange is "probably in line for a good Q4!" The 29-year-old crypto billionaire highlighted Coinbase's third-quarter volume, which stood at $600 million.

The addition of more coins likely contributed to the continued decline in bitcoin's share of total trading volume, which slipped to 19% from 24% in the second quarter and 39% in the first. Similarly, the trading volume of ether dropped to 22% in the third quarter from 26% in the previous one.

Coinbase also said its monthly transacting users slid to 7.4 million in the third quarter from 8.8 million in the second quarter. The figure though is higher compared to the 6.1 million in the same period last year.

"As our year-to-date results have clearly demonstrated, our business is volatile," the company said in its shareholder letter. "Coinbase is not a quarter-to-quarter investment, but rather a long-term investment in the growth of the cryptoeconomy and our ability to serve users through our products and services. We encourage our investors to take this point of view."

Still, third-quarter subscription and services revenue grew 41% to $145 million compared to the $103 million in the second quarter.

"Despite the quarterly miss, we point to a number of positive quarterly metrics: Both trading volumes and [monthly transacting users] exceeded Street's expectations," Wedbush analysts said in a note, while giving Coinbase stock an outperform rating.

Meanwhile, Coinbase is also actively diversifying its services from launching an NFT platform to derivatives trading.

This thrust however has also led the exchange to receive heightened scrutiny from regulators. Earlier this year, the US and Exchange Commission threatened to sue Coinbase over a new lending product, which the exchange has since shelved.