Coinbases Q3 Revenue Falls Short of Expectations Why Confidence in PostElection Industry Remains High

What happened?
The largest cryptocurrency exchange in the United States, Coinbase, announced its Q3 2024 financial report and shareholder letter, revealing that its financial performance for the third quarter was less than ideal, with both revenue and profit falling short of market expectations.
In the shareholder letter, Coinbase expressed an optimistic attitude toward the promotion of crypto-friendly legislation in the new Congress and emphasized its willingness to collaborate with the new government, regardless of whether the Democrats or Republicans win.
Coinbase believes that the cryptocurrency policy positions of both Vice President Kamala Harris and former President Donald Trump have become noticeably more favorable, suggesting that there may be more regulations beneficial to the cryptocurrency industry in the future.
Despite the disappointing revenue and profit figures for the third quarter, Coinbase’s stock price fell nearly 7% in after-hours trading following the release of the financial report.
Coinbase reported total revenue of $1.2 billion for Q3, slightly below Wall Street analysts’ expectations of $1.26 billion. The company’s primary source of revenue comes from transaction fees; however, the total trading volume on Coinbase significantly decreased due to a decline in market activity, dropping 27% compared to Q2.
The company indicated that the primary reason for the decrease in trading volume at U.S. exchanges was the weak market conditions. Nevertheless, Anil Gupta, Vice President of Investor Relations at Coinbase, stated that despite the decline in trading revenue, Coinbase remains optimistic about the company’s overall performance.
In addition, Coinbase’s board approved a stock buyback plan of up to $1 billion in October. The company will repurchase shares based on market conditions, with a maximum buyback of $1 billion without an expiration date.
Despite facing challenges from fluctuating trading revenue, Coinbase is committed to diversifying its business development and has launched several new projects. Recently, Coinbase introduced a new feature allowing Visa debit card holders to quickly transfer funds to their Coinbase accounts.
Additionally, Coinbase has ventured into asset custody services and the tokenization of real-world assets (RWA) to expand its revenue sources and reduce reliance on trading volume.
Coinbase actively promotes crypto-friendly policies and holds an optimistic view regarding the U.S. 2024 election outcomes.
In its Q3 2024 shareholder letter released on October 30, Coinbase stated that it is “ready to work with any U.S. government” whether the Democratic candidate Kamala Harris or Republican Donald Trump wins the presidential election, and it anticipates providing further recommendations to enhance regulatory clarity for the cryptocurrency industry when the new Congress takes office in January 2025.
“Presidential candidates and parties have taken a more favorable stance on cryptocurrencies, which represents a significant shift compared to previous years,” Coinbase added. “Despite opposition from the White House, recent bipartisan legislation has passed to support cryptocurrencies, indicating that support for cryptocurrencies is growing.”
Coinbase CEO Brian Armstrong expressed high expectations, noting that “the next government, regardless of party affiliation, may create a positive development environment for the crypto industry.”
He reiterated that the company will continue to support pro-cryptocurrency candidates through its Political Action Committee (PAC) initiatives, “Fairshake” and “Stand With Crypto,” and pledged an additional $25 million to Fairshake, bringing the total contributions to $50 million when combined with previous donations.
Reference: coindesk, cointelegraph