Crypto trading giant Coinbase saw its shares climb by 12.5% on February 24 following the company’s fourth quarter results smashing expectations.
Despite the positive results, the company expects its monthly transacting users and total trading volume to decline in the first quarter of 2022 following recent volatility in the crypto asset space.
In 2021’s final three months, Coinbase pulled in $2.5 billion (£1.87bn) in total revenue, up 327% from the year-ago quarter at $585 million (£437m).
This top-line growth brought about even greater profit margins, with company net income multiplying almost five-fold from $176m (£132m) in Q4 2020 to $840m (£628m) across the same period in 2021.
Coinbase’s earnings per share for last year’s final quarter more than doubled investors’ expectations, reaching $3.92 (£2.93) per share as opposed to an anticipated $1.85 (£1.38).
Breaking down the results further, retail trading activity in terms of volume continued to be outmatched by institutional volume.
Despite this dominance, retail trading made up the vast majority of Q4 revenue thanks to Coinbase’s high consumer fees. Retail trades brought in $2.19bn (£1.63bn) in revenue over 2021’s Christmas quarter, whilst institutional trades only turned over $91m (£68m).
Another key take-away from the data is the declining superiority of Bitcoin in the cryptocurrency space, at least in terms of Coinbase users. In 2020’s final quarter, Bitcoin made up 38% of Coinbase’s total trading volume, whereas for the same period in 2021 it took up just 16%, tying with Ethereum.
Notably, “other crypto assets” stole the greatest percentage of trading volume over 2021, a clear indicator of the growing competition in the cryptocurrency space.
Coinbase stole the show earlier this month at the Super Bowl with its distinct half-time advert in what has been dubbed the “Crypto Bowl” due to the prominence of adverts relating to digital assets.
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