GuShiio.com Coinbase’s earnings report will reveal whether loose regulation can really drive profits soaring?
Author: Cai Zijun, Jin Shi Data
Donald Trump’s return to the White House has given investors in Bitcoin and Coinbase(COIN.O) more reason to cheer. The new president has promised to promote the development of the U.S. crypto industry by deregulation. After Thursday’s close, investors will learn whether the celebrations translate into higher profits.
Coinbase expects to report earnings per share (EPS) of $2.11 in the fourth quarter on revenue of $1.84 billion, based on analyst forecasts compiled by FactSet. This is a significant increase from earnings per share of US$1.04 and revenue of US$954 million in the fourth quarter of 2023.
Trump’s election is good news for cryptocurrency prices and Coinbase’s share price.Coinbase shares have risen about 40% to $272 since Trump’s victory.Bitcoin’s increase was similar, growing 42% to $96,882.
The reason for these increases is Trump’s promise to build the United States into the global cryptocurrency capital by introducing a looser regulatory regime. Trump has appointed or nominated pro-cryptocurrency regulators in multiple agencies, including the Securities and Exchange Commission (SEC), the Federal Deposit Insurance Corporation (FDIC), and the Commodity Futures Trading Commission (CFTC).
Under the leadership of Acting Chairman Mark Uyeda, the SEC has begun advancing a cryptocurrency working group aimed at developing options for the industry’s legal operations in the United States, while venture capitalist David Sacks has led similar efforts at the White House.
The changes are critical to Coinbase because the SEC sued the company in 2023, accusing it of operating an unregistered stock exchange. Coinbase pleaded guilty to the accusation. Under Trump, the SEC may have a strong chance of dropping the case or reaching some kind of agreement that will allow Coinbase to continue operating as planned.
Coinbase did not respond to requests for comment. Company executives told Barron’s last year that the SEC’s change in position could prompt Coinbase to provide more token trading and other cryptocurrency services, driving the company’s revenue growth.
For Coinbase, regulatory changes are a double-edged sword. As regulators become more friendly, traditional brokerages may increase competition for cryptocurrency trading.
Analysts estimate Coinbase’s total trading volume in the fourth quarter was $216 billion, up from $185 billion in the third quarter and $154 billion in the fourth quarter of 2023. Although the growth was significant, it was still well below the US$312 billion in trading volume recorded by Coinbase in the first quarter of last year, when the approval of Bitcoin spot exchange-traded funds (ETFs) triggered a renewed wave of cryptocurrency trading.
Investors will also focus on the continued growth of Coinbase’s subscriptions and services business, including the company’s revenue from stablecoin USDC.Revenue from the division is expected to be $611 million, up from $375 million in the same period last year.
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