What Happened?
Shares of cryptocurrency exchange Coinbase (NASDAQ:COIN) fell 12.4% in the afternoon session after the company reported weak third quarter earnings, which missed on key metrics we track, including revenue, EBITDA, and EPS. Transaction revenue declined quarter on quarter, as management called out softer market conditions amid lower crypto asset prices for the large part of the quarter.
On a brighter note, the company highlighted the potential for more regulatory clarity in the crypto space following the November 2024 elections. Overall, this was a softer quarter.
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What The Market Is Telling Us
Coinbase’s shares are extremely volatile and have had 77 moves greater than 5% over the last year. But moves this big are rare even for Coinbase and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 3 days ago when the stock gained 5.5% on the news that stocks exposed to the cryptocurrency market soared as momentum improved. Notably, Bitcoin, the most popular crypto asset, is set to edge past the $70,000 level, a move that could clear the way for a retest of the all-time high of $73,000 achieved in March 2024.
Also, with roughly a week until the U.S. 2024 elections, markets anticipate a potential regulatory review of the crypto space when a new administration is elected. Overall, the sentiment suggests markets are itching for a change.
Separately, Coinbase revealed a new AI tool for creating AI-powered agents (which could include bots for trading, portfolio management, and even interacting with smart contracts) in less than three minutes. This tool was built on the Coinbase developer platform in collaboration with OpenAI—the creators of ChatGPT—and Replit, a cloud-based software development environment.
The announcement highlights the growing effort to lower the adoption barrier for users interested in building AI-driven products. It also provides analysts with more clarity when assessing how Coinbase can participate and benefit from the growing market for artificial intelligence.
Coinbase is up 18% since the beginning of the year, but at $184.97 per share, it is still trading 33.9% below its 52-week high of $279.71 from March 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 $563.91.
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