Coinbase Stock Is Down After Earnings as Bitcoin Keeps Rising — Barrons.com

Paul R. La MonicaA continued rally in Bitcoin doesn't seem to be enough to lift Coinbase stock. The shares were lower Friday as investors in the cryptocurrency investment firm weighed mixed financial results disclosed late Thursday.Coinbase's sales rose 24% to $2 billion, slightly missing forecasts. Earnings came in at $65.6 million, or $1.94 per share on an adjusted basis. Analysts tracked by FactSet were expecting revenue of $2.1 billion and earnings per share of $1.93.Shares of Coinbase fell 1% in late morning trading on Friday.The stock finished the Thursday trading session up 5.1% after the price of Bitcoin rose back above $100,000. It was near $103,000 on Friday morning.Coinbase also announced an acquisition Thursday morning that will boost its crypto derivatives business: The company is buying crypto options exchange Deribit for $2.9 billion.Anil Gupta, vice president of investor relations for Coinbase, told Barron's in an interview following the earnings release that the deal will help Coinbase gain even more market share in the crypto derivatives business.Another Coinbase executive also thinks that Deribit and Coinbase are a good fit.The deal "complements the record growth we've already seen in our own derivatives business," said Greg Tusar, Coinbase's vice president of institutional product, in an email before earnings were released.Coinbase is hoping to find more ways to diversify beyond trading. The company is somewhat subject to the whims of Bitcoin prices, which have fluctuated wildly this year. Lower prices tend to mean less trading: First-quarter transaction revenue came in at $1.3 billion, down 19% from the fourth quarter.Still, CEO Brian Armstrong said during a conference call with analysts Thursday that Coinbase is "financially better positioned than ever to capitalize on opportunities," adding that the "business has been resilient even in an uncertain macro environment."Coinbase has also been whipsawed by the volatility in stocks. Coming into Thursday, shares were down nearly 20% this year after a hot start to 2025. The stock surged before President Donald Trump's inauguration, partly on the hopes that Trump and his top economic advisors would support pro-crypto regulatory policies.But Bitcoin prices peaked at a record high of just under $110,000 in mid-January, then plunged below $75,000 by early April as most risk assets plummeted in response to Trump's "Liberation Day" tariff announcement.Gupta said Coinbase is hopeful that Trump's favorable views on crypto will help the industry."We have a pro-crypto president. That is important," Gupta said, adding that Coinbase is optimistic that Congress will eventually pass a crypto bill that would create regulations for so-called stablecoins, digital currencies backed by other financial assets.The Senate voted against a procedural motion late Thursday that would have advanced the bill for further discussion, but Gupta said the company was confident Congress will pick up the legislation again and that Coinbase was optimistic.The company touted the creation of the Strategic Bitcoin Reserve in its earnings release as one of many highlights coming from Washington in the first quarter."[The quarter] marked a turning point in the U.S. policy landscape — shifting from gridlock to tangible momentum. Across legislation, regulation, and litigation, the direction of travel is clear: progress," the company said.Coinbase is hoping to boost its stablecoin trading business. The company has a partnership with payments tech firm Circle, which developed the USD Coin that is pegged to the dollar.Coinbase is also looking to generate more fees from crypto staking, which allows investors to earn rewards by locking digital coins in virtual wallets, as well as other custodial services.Results from these businesses helped soften the blow from the sequential decline in transactions. Coinbase said in its earnings report that subscription and services revenue rose 9% from the fourth quarter to $698 million, adding that this was "driven primarily by stablecoin revenue."Several Wall Street analysts noted in reports before the company's earnings release that Coinbase will benefit from more regulatory clarity about stablecoins, as well as a decline in overall market volatility. Investors just may need to wait a little longer, though, before that happens.Write to Paul R. La Monica at [email protected] content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.