What Happened?
Shares of cryptocurrency exchange Coinbase (NASDAQ:COIN) fell 8.2% in the morning session after stocks tied to the crypto market fell, mirroring the weakness in digital assets. Bitcoin, the largest cryptocurrency by market cap, dropped to $87,000, a 20% decline from its all-time high of $109,114 on January 20, 2025. Historically, when Bitcoin stumbles, the broader crypto market takes a harder hit, and this time is no exception.
With traders cashing out, cutting losses, or just waiting on the sidelines, this could translate to a slowdown in trading activity on platforms like Robinhood and Coinbase, which could impact their revenues.
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What The Market Is Telling Us
Coinbase’s shares are extremely volatile and have had 72 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 11 days ago when the stock dropped 7.1% on the news that the company reported fourth-quarter 2024 results with exceptionally high expectations heading into the prints, making it hard for the stock to maintain its positive momentum after the results were released.
The quarter itself was fine, as Coinbase blew past analysts' revenue, EBITDA, and EPS expectations. Specifically, its subscription and services revenue, which is less volatile than transaction revenue, clocked in at $641 million vs management's guidance of $543 million at the midpoint ($580 million at the high end of the range).
However, given the impressive growth prints recorded by a peer, Robinhood, earlier in the week, Coinbase had a lofty bar to clear, and the results paled compared to this benchmark from the market's perspective. Zooming out, this quarter featured some important positives, but the high expectations are weighing on the stock.
Coinbase is down 19.2% since the beginning of the year, and at $207.87 per share, it is trading 39.5% below its 52-week high of $343.62 from December 2024. Investors who bought $1,000 worth of Coinbase’s shares at the IPO in April 2021 would now be looking at an investment worth $633.21.
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