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Coinbase says crypto markets have ‘improved,’ but the year is uncertain

Coinbase logo and a man with a question mark paper as a head

Coinbase Global Inc. on Tuesday reported fourth-quarter results that beat estimates and said the crypto market had “improved” so far in the first quarter but that the rest of the year remained cloudy.

The crypto-trading platform reported a fourth-quarter net loss of $557 million, or $2.46 a share, compared with a profit of $840 million, or $3.32 a share, in the same quarter in 2021. Revenue came in at $605 million, compared with $2.49 billion in the prior-year quarter.

Analysts polled by FactSet expected Coinbase (COIN) to lose $2.52 a share, on revenue of $588 million.

FactSet forecast a first-quarter loss of $1.74 a share, on revenue of $598 million. For the full year, those forecasts called for a loss of $5.19 a share, with revenue of $2.77 billion.

Shares rose 0.9% after hours.

The results follow a flight from crypto trading that began in 2021, as inflation and recession fears made traders more cautious over volatile assets. And which was punctuated last year by the collapse of the crypto exchange FTX. However, shares of Coinbase have risen so far this year, in tandem with a rebound in the price of bitcoin.

Still, D.A. Davidson analysts, in a research note last week, noted that U.S. regulators have begun clamping down more aggressively on crypto, following growing concerns about security and fraud. The Securities and Exchange Commission has proposed measures that would tighten up custody requirements. And the agency has targeted other companies over stablecoins — or cryptocurrencies whose value is pegged to another asset. Like traditional money — and staking, a way to earn passive income on crypto holdings.

“While we still agree with (management’s) view that improved clarity and a level playing field should ultimately prove to be good for both Coinbase and the sector overall. The near-term path looks increasingly treacherous,” the analysts said.

While Coinbase stock is up so far this year, over the past 12 months shares have fallen 64.3%. By comparison, the S&P 500 Index has fallen 7.1% over the past 12 months.