Shares of Coinbase (NASDAQ:COIN) are down more than 17% in premarket trading Wednesday after the crypto exchange platform operator reported worse-than-expected Q1 2022 results and guidance.
The company reported Q1 revenue of $1.17 billion, down 53% QoQ and well below the consensus estimates of $1.48 billion. A loss per share stood at $1.98 in the quarter, compared to EPS of $3.32 in the previous quarter.
COIN generated $1.01 billion in transaction revenue, down 56% QoQ and below the analyst consensus of $1.26 billion. The company also reported 9.2 million monthly transacting users, down 19% QoQ and compared to the analyst expectations of 9.5 million.
Trading volume totaled $309 billion in the period, down 44% QoQ and below the consensus projection of $335.6 billion. Coinbase reported a retail trading volume of $74 billion, down 58% QoQ, while analysts were looking for $97.96 billion.
Institutional trading volume stood at $235 billion, down 37% QoQ and compared to the consensus estimates of $243.24 billion. COIN reported $256 billion in assets on platform, down 7.9% QoQ, while analysts were expecting $264.3 billion.
For the full fiscal year, Coinbase reiterated its guidance for monthly transacting users of 5 million to 15 million, compared to analyst expectations of 10.2 million. COIN reported 8.9 million monthly transacting users and $74 billion in total trading volume for April.
The company expects the number of monthly transacting users to be even lower in Q2 than in Q1 and said it expects to manage potential 2022 adjusted EBITDA losses to roughly $500 million for the full year.
“We believe these market conditions are not permanent and we remain focused on the long- term”
Coinbase CEO Brian Armstrong said disclosure in the company’s latest quarterly filing did not suggest that the company faced a bankruptcy risk and it had been made to meet an SEC requirement.
The 10-Q filing notes: “Because custodially held crypto assets may be considered to be the property of a bankruptcy estate, in the event of a bankruptcy, the crypto assets we hold in custody on behalf of our customers could be subject to bankruptcy proceedings and such customers could be treated as our general unsecured creditors.”
Still, Armstrong insists that COIN has “no risk of bankruptcy.”
He added that it was unlikely that "a court would decide to consider customer assets as part of the company in bankruptcy proceedings", though he acknowledged it is possible.
Bank of America analyst Jason Kupferberg said that weak crypto prices and volatility weighed on Q1. Still, the analyst reiterated a Buy rating as “COIN remains well-positioned to roll out new products that will generate top line growth and diversify revenues.”
Opposite of Kupferberg, Raymond James analyst Patrick O'Shaughnessy maintained an Underperform rating.
“We expect Coinbase’s EBITDA may turn negative over the coming quarters. Over the longer-term, we continue to believe that significant retail pricing pressure is a matter of when, not if, and also believe the cons of increased crypto regulation down the road will decidedly outweigh the pros,” O'Shaughnessy told clients.
By Senad Karaahmetovic