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Coinbase Stock Plunges as Third-Quarter Profit Trails Forecasts

Coinbase's net income totaled $1.62 a share, soaring from 23 cents a year ago, but trailing the analyst consensus of $1.77 a share.

Coinbase Global  (COIN)  shares plunged Tuesday, after the biggest U.S. cryptocurrency exchange reported profit that trailed expectations in the third quarter.

A summer slowdown in digital currency trading limited the company’s gains.

Net income totaled $406 million, or $1.62 a share, for the third quarter, up from $81 million, or 23 cents, a year ago. The FactSet analyst consensus called for $1.77 a share in the latest quarter.

Coinbase posted revenue of $1.31 billion in the third quarter, more than quadrupling the year-earlier total of $315 million and matching analysts’ estimate.

The stock on Tuesday fell 11% to $317.51 in after-hours trading. It closed about 1% higher in the regular session. Coinbase soared 44% in the month ended Monday, as investor mania has boosted digital currencies, generating heavy trading.

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In its letter to shareholders, Coinbase acknowledged the volatility of its business and urged investors to focus on the long term. “As our year-to-date results have clearly demonstrated, our business is volatile,” the company said.

“Coinbase is not a quarter-to-quarter investment, but rather a long-term investment in the growth of the crypto-economy and our ability to serve users through our products and services.”

Further, “Swings in market conditions are expected in these early days of the crypto-economy. However, the crypto-economy is growing and innovating throughout, and Coinbase is positioned to thrive,” it said.

As for the fourth quarter, “October trends include higher levels of activity among retail traders who have historically traded more on Coinbase during periods of heightened volatility,” Coinbase said.

“We believe that retail monthly transacting users and total trading volume will be higher in Q4 as compared to Q3.”