Coinbase Revenue Falls Amidst Market Slowdown, Will the $25M Political Play Pay Off?

• Coinbase fell short of analyst expectations with $1.13B Q3 revenue, down $25M from Q2 2024.
• The drop has to do withlower retail and institutional altcoin trading volumes. Meanwhile, Bitcoin ($BTC) and Tether ($USDT) trading volumes were higher than usual.
• Weak financial results don't undermine Coinbase's confidence in the future, as suggested by yesterday's $25M donation to FairShake political action committee (PAC).

After losing 0.68% of its market share in September, Coinbase reports weaker-than-expected Q3 revenue.

The company's results have been falling for three consecutive quarters, likely caused by subdued consumer and institutional trading volumes. As a result, Coinbase stock dipped by 3.61% today, but the monthly change remains positive (+18.84%).

Despite the hurdles, Coinbase found $25M to donate to crypto-focused PAC FairShake, hoping for a bullish reversal post-election.

Coinbase Revenue Dips Amidst Market SlowdownCoinbase generated nearly $1.13B in Q3 net revenue, $25M down from Q2 2024. Transaction revenue accounted for $572.5M, and subscription and services revenue accounted for $556.1M. Wall Street analysts predicted the company's revenue to reach $1.26B.

The change in total revenue mainly has to do with dampened trading activity - consumer trading volumes fell by $3B and institutional volumes by $41B compared to Q2 2024.

The share of $BTC and $USDT transactions grew by 2% and 5%, respectively, while altcoin transaction volume dipped by 7%.

On a good note, Coinbase (which recently introduced real-time crypto funding for US & EU customers) managed tocut operational expenses by $70.8MQ/Q despite hiring nearly 200 new full-time employees. Most expenses come from the platform's technological development, followed by administrative costs.

In a year-to-year outlook, Coinbase now holds $83.6M more in assets, bringing its total holdings to $290.5M. A large part of this comes from customers' assets under custody. Retail trading revenue grew 98% from Q3 2023, and institutional revenue surged 292%.

Will the Political Play Pay Off?

Although Coinbase's financial results fell short of expectations, its CEO, Brian Armstrong, is hopeful for the future.

We get the U.S. election results in 6 days, and no matter how you slice it, it will be the most pro-crypto congress ever.Brian Armstrong

Yesterday, Coinbase donated another $25M to the pro-crypto PAC FairShake. The funds will go toward supporting pro-crypto politicians in the upcoming years.

Coinbase also plans to aid the Stand With Crypto advocacy group reach 4M members by the 2026 midterm elections.

Beyond politics and legal issues with the SEC, Coinbase is expressing interest in sports. Runners of the Melbourne Marathon Festival could receive digital medals stored on the Base blockchain as NFTs.

Coinbase launched the Base blockchain in 2023, and it quickly gained traction in the meme coin community, reaching $2.6B in total value locked (TVL).

Each medal is unique and features the athlete's performance metrics. Medal owners also get access to exclusive benefits like guaranteed registration at the next marathon.

Focus on the Future

Coinbase's Q3 results undershoot analyst expectations, but the company's long-term prospects are optimistic - as are the entire market's.

Strategic investments in crypto-friendly political organizations could earn Coinbase leniency from regulatorsand a stronger voice in shaping the industry's future.

Will this be enough to regain the lost market share? We'll have to wait and see.

References

• Q3 Shareholder Letter (Coinbase)
• Top Blockchains by Total Value Locked (TVL) (CoinGecko)
• Brian Armstrong (X)

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