Coinbase Stock Jumps On Big Earnings Beat As Transaction Volume Grows—Key Level to Watch

Key Takeaways

• Coinbase shares rose sharply in after-hours trading after the crypto exchange reported fourth-quarter earnings and revenue that came in substantially above Wall Street estimates.
• The company said excitement surrounding the approval of spot Bitcoin ETFs and expectations of improving macroeconomic conditions in 2024 boosted quarterly transaction revenue.
• Coinbase shares may encounter resistance from the top trendline of an ascending channel around $210.

Coinbase Global, Inc.

Source: TradingView.com.

Coinbase (COIN) shares jumped more than 14% in Thursday’s extended-hours trading session after the largest U.S. cryptocurrency exchange reported quarterly earnings and revenue significantly above Wall Street expectations thanks to growth in transaction volumes.

The crypto exchange, which allows investors to buy, sell, receive, or hold digital assets, posted fourth-quarter adjusted earnings of $1.04 per share, compared with a loss of $2.46 per share in last year’s corresponding quarter. Analysts had expected the company to report earnings of just 2 cents a share. Total revenue of nearly $954 million grew 41% on a sequential basis and also came in ahead of the consensus estimate, which Wall Street had pegged at $826 million.

The quarterly results received a boost from transaction revenue growing 64% from a year earlier on the back of excitement surrounding spot Bitcoin ETF approvals and expectations of improving macroeconomic conditions in 2024. Looking ahead, the company said it expects first-quarter subscription and services revenue—a segment that includes activities outside trading—to range between $410 million and $480 million, beating the Street estimate of $356.22 million.

Coinbase also quelled investor concerns about shrinking market share arising from increased competition in the crypto trading space from rival firms such as Robinhood Markets (HOOD) and Fidelity Investments.

“Candidly I think the worries about fee compression have been happening for years, and we haven’t seen it,” said the company’s Vice President of Investor Relations Anil Gupta. The company posted trading volumes of $154 billion in the fourth quarter, up from $76 billion in the third quarter, and ahead of the $142.7 billion figure analysts had projected.

Since bottoming out in late December 2022, COIN shares have traded within an ascending channel, oscillating several times between the pattern’s upper and lower levels to establish key support and resistance areas. More recently, buyers stepped up to defend a pullback to the 50-day moving average, indicating growing bullish momentum in the stock. Amid an earnings-driven price pop, keep an eye on the channel’s upper trendline currently sitting around $210, which investors may see as an area on the chart to book profits.

Coinbase shares rose 14.3% to $189.29 in extended trading Thursday.

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As of the date this article was written, the author does not own any of the above securities.