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Coinbase Global Inc. has announced its first profit in two years, with revenue up 51%, leading to a surge in COIN stock price. Coinbase had an outstanding performance in the fourth quarter of 2023, with a net income of $273 million. Last year, the total revenue was $3.1 billion, with a net income contribution of $95 million.
According to a shareholder letter dated February 15, 2024, the company's adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) have exceeded expectations, nearing $1 billion. This financial improvement has also propelled Coinbase's stock to rise to over $189 in after-hours trading.
Strategic Victory for Coinbase
Chief Financial Officer Alesia Haas attributed Coinbase's extraordinary success to several key factors. In an interview with CNBC, she explained, "Cryptocurrency is a volatile space, and when we see increased volatility, it historically attracts more trading volume to our platform, which is exactly what we saw at the end of the fourth quarter, as the Bitcoin ETF sparked our belief in an improved macroeconomic environment for 2024."
Coinbase is the custodian of 90% of the assets of the Bitcoin Exchange Traded Fund (ETF), benefiting greatly from the massive net inflows of $4 billion. Additionally, interest income from the increase in interest rates by the Federal Reserve, coupled with its collaboration with Circle, further boosted the exchange's revenue.
Regulatory Environment
ARK Invest CEO and Chief Information Officer Cathie Wood echoed Haas's sentiments, highlighting Coinbase's strong performance in turbulent markets. Wood emphasized the company's compliance in an interview with Yahoo Finance, stating, "From a regulatory standpoint, it is the most compliant exchange. Last year, the collapse of FTX resulted in it losing all of its competitors, and even Binance's issuance from the perspective of market share has had a positive impact on Coinbase."
Meanwhile, the lawsuit filed by the U.S. Securities and Exchange Commission against Coinbase is still pending. Both parties are currently awaiting a decision on Coinbase's motion to dismiss (MTD). It's worth noting that legal experts have been leaning towards Coinbase's position. For instance, Bloomberg Intelligence Senior Litigation Analyst Elliot Z. Stein believes Coinbase has a 70% chance of winning.
Wood is also optimistic about Coinbase's chances, citing victories in cases like Ripple and Grayscale.
COIN Surge and Future Outlook
The profits have driven an increase in the exchange's stock price. On February 15, COIN surged over 14% in after-hours trading. At closing, the stock price was $165.67, up $5.29, or 3.30%. Additionally, both Coinbase and Bitcoin have risen by over 20% this month.
Interestingly, on February 14, ARK sold 214,068 coins. However, Wood emphasized that this was merely an example of trimming positions to realize profits, with no further implications.
The world's second-largest cryptocurrency exchange plans to focus heavily on the USDC stablecoin this year. It aims to leverage its Layer 2 blockchain Base to explore and enhance the practicality of blockchain. Additionally, the exchange is committed to continuing its regulatory efforts for itself and the broader Web3 industry. |
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Post time 22-2-2024 06:48:15