Coinbase (COIN) shares fell more than 5% in after-hours trading Thursday after the cryptocurrency platform reported weaker-than-expected first-quarter results as falling cryptocurrency prices dampened trading activity in one of the company’s main sources of revenue.
The company reported a loss of $1.49 per share, while analysts expected a profit of $0.27 per share. Revenue was $1.41 billion, missing estimates of $1.52 billion.
Trading revenue totaled $755.8 million, missing analysts’ expectations of $805.2 million. Subscription and services revenue, closely watched by investors as Coinbase attempts to reduce its reliance on transaction fees, totaled $583.5 million, missing estimates of $619.3 million.
Cryptocurrency markets weaken sharply on Bitcoin Wait for digital assets to fall. Lower prices and lower volatility typically lead to lower spot trading volumes across exchanges. Although Bitcoin has rebounded by about 12% in March, investors are anticipating a slowdown in the economy following the cryptocurrency sell-off at the beginning of the quarter.
Coinbase has been expanding its core trading business into stablecoins, staking, derivatives and blockchain infrastructure over the past few years. The company said on Wednesday that its global cryptocurrency trading volume market share rose to 8.6%, a record high, in part due to growth in derivatives trading.
Coinbase said derivatives trading volume in the past 12 months increased 169% year-over-year, while retail derivatives revenue exceeded the annualized run rate of $200 million for the first time.
The company also noted growth in prediction market and stablecoin activity. Coinbase said its prediction markets business generated annualized revenue of more than $100 million in the first two months after launching in the United States.
Meanwhile, Coinbase said its Base blockchain handled 62% of global on-chain stablecoin trading volume during the quarter.
Earlier this week, Coinbase said it would lay off about 700 people, or about 14% of its workforce, as part of an artificial intelligence-driven restructuring effort. The company also cited the broader cryptocurrency downturn as a factor behind the layoffs.
Investors are increasingly concerned about whether Coinbase’s subscription and infrastructure businesses can offset cyclical swings in cryptocurrency trading revenue during market weakness.
