Coinbase, the largest publicly traded cryptocurrency exchange, announced its Q1 results late Thursday. Coinbase stock has rocketed nearly 65% so far this year as bitcoin and ethereum led digital asset prices higher, propelled partly by renewed banking fears in March. Meanwhile, the exchange faces off against the SEC as it fights for regulatory clarity in the wake of cryptocurrency crackdowns. But that hasn't stopped ARK Invest CEO Cathie Wood from continuing to load up on COIN stock.
Cathie Wood Loads Up On COIN Stock
Wood was a Coinbase stock buyer this week, adding substantially to her funds' positions ahead of earnings, according to ARK Invest's daily trade updates.
Wood bought 168,869 shares of COIN stock Monday worth $8.46 million based on Monday's closing price of 50.14. She followed that up by adding 147,137 shares on Tuesday worth $7.55 million, based on the 51.32 closing price. On Wednesday, ARK bought 18,234 shares worth $884,166 based on COIN's 48.49 closing price.
The Coinbase shares were distributed among the Ark Innovation ETF, the ARK Next Generation Internet ETF and the Ark Fintech Innovation ETF. Notably, most of the shares were added to ARKK, similar to previous buying sprees.
Wood is no stranger to buying the dip on Coinbase. In late March, ARK added nearly $18 million in shares of Coinbase after the stock slumped following a warning from the SEC. Also, Wood added $13 million worth of shares in late February after Coinbase edged out earnings forecasts.
Coinbase Earnings
Results: Coinbase reported a loss of 34 cents per share as revenue carved 33% lower to $772.53 million. However, sales were up 22% from Q4.
Expectations: FactSet analysts expected Coinbase to report a loss of $1.45 per share, compared with a loss of $1.98 last year. FactSet saw revenue diving 43% to $655 million.
Consumer trading volume plummeted 71% over the year to $21 billion in Q1. Institutional trading volume nearly halved to $124 billion for the period. However, reported subscription and services revenue more-than doubled, spiking to $361.7 million from $151.9 million last year. That translated to a 63% drop in total transaction revenue, tumbling to $374.7 million from $1.01 billion last year.
Coinbase did not initially release an update on its number of verified users. But analysts guided an increase to 111.97 million from 109.1 million at year-end.
Outlook: For the second quarter, Coinbase forecasts around $300 million in subscription and services revenue. The company said it plans to focus on cost-reduction efforts and work torward its goal of improving adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) compared to full-year 2022. However, Coinbase noted the crypto industry remains volatile with the ongoing banking concerns and regulatory uncertainty.
Coinbase, SEC Standoff
Coinbase received a Wells Notice from the Securities and Exchange Commission on March 23, a warning the regulator intends to recommend enforcement action for potential securities violations against some of its exchange products.
The company responded with a lawsuit against the SEC on April 24. Coinbase requested the regulator publicly share its decision on a July 2022 petition about whether it would allow the crypto industry to be regulated using existing frameworks.
The exchange remains adamant that it does not sell securities, and maintains compliance with all applicable laws. And Coinbase says its business model and process for listing cryptocurrencies haven't changed since regulators approved the company to go public.
In its initial response, Coinbase said the SEC failed to respond to multiple requests for clarification.
On April 18, CEO Brian Armstrong floated the possibility of Coinbase moving overseas if regulators fail to establish a clear regulatory framework.
Coinbase Stock
COIN stock spiked 18.3% Friday, following results and after adding 2.2% during regular trade on Thursday. Shares have tumbled 21% over the past three months as the SEC ramped up its crackdown on the industry in the wake of the FTX collapse. Still, Coinbase stock is up 65% this year, through Thursday, as the crypto winter shows signs of thawing.
You can follow Harrison Miller for more stock news and updates on Twitter @IBD_Harrison
