Coinbase jumps 6% after smashing Q2 revenue estimates as trading volumes surge - and as it reveals Elon Musk, Tesla, and SpaceX are clients
- Coinbase stock rose 6% on Wednesday after the crypto exchange smashed 2Q revenue estimates.
- Quarterly revenue rose 27% on the year to $2.2 billion, compared with analysts' forecast for $1.78 billion.
- Elon Musk, Tesla, and SpaceX were listed as Coinbase clients, alongside 10% of the largest hedge funds.
Coinbase stock rose as much as 6% in regular trading on Wednesday after the crypto exchange reported second-quarter earnings that crushed analyst expectations, boosted by a volatility-spurred jump in trading volumes.
The largest crypto exchange in the US posted total second-quarter revenue of $2.2 billion, of which $1.9 billion was transaction revenue and the remainder from subscriptions and services.
Here are the key figures:
Revenue: $2.2 billion versus $1.78 billion expected by analysts polled by Refinitiv
EPS: $3.45 per share versus $2.33 per share expected
Trading volumes: $462 billion versus $335 billion in the first quarter
Coinbase also revealed that it counts Elon Musk, Tesla, and SpaceX as clients, alongside as much as 10% of the top 100 largest hedge funds.
Tesla and SpaceX CEO Musk said in March that even dogecoin should be added to Coinbase, responding to a rumor that Tesla was buying its bitcoin on the platform. Coinbase eventually listed the meme-inspired asset in June.
Coinbase's stock rose to as much as $284.48 at Wednesday's market open, up from Tuesday's closing price of $269.67.
The company said its quarterly profit was lifted by volatility in crypto-asset prices, as buyers and sellers made more trades to try to gain from the moves. This year, leading digital currencies bitcoin and ether have each declined over 45% after hitting all-time highs in the spring.
"As volatility and crypto-asset prices are highly correlated with trading revenue, the crypto market environment heavily influenced our Q2 financial results," Coinbase said in a statement.
Ether represented 26% of the exchange's total trading volumes, overtaking bitcoin with its share of 24%. Total retail trading volume came in at $145 billion, a 21% jump from the previous quarter.
Coinbase said expanding interest in decentralized finance (DeFi) applications, non-fungible token (NFT) ecosystems, and the ethereum blockchain network's 2.0 upgrade drove ether's growth.
"We believe the products that the most crypto-forward people are using today such as DeFi will be used by mainstream customers soon, and by institutions soon after that," the exchange said.
The number of retail users transacting at least once a month, known as MTUs, grew 44% from the first quarter to 8.8 million in the three months to June. But the tally dwindled along with trading volume in July as "volatility declined significantly relative to Q2 levels," Coinbase said. With this in mind, the exchange expects trading volumes to be lower in the third quarter.
CEO Brian Armstrong said in an earnings call that Coinbase wants to be "the Amazon of assets" by listing every crypto asset that is legal. It added 22 new assets in the second quarter.
"There are thousands of them today. There are eventually going to be millions of them," he said.