Coinbase tops earnings forecasts. The stock went up.

Coinbase’s loss for the full year before tax, depreciation, and amortization was $371 million. In an earnings preview released in January, Coinbase said it expected the loss to fall below $500 million.

Coinbase said its net revenue rose 5% from the previous quarter, driven by a 34% increase in subscriptions and services revenue. Transaction revenue, which includes fees investors pay to trade, fell 12%.

This is breaking news. Read a preview of the earnings below and check back for updates and analysis.

Cryptocurrency broker Coinbase Global is preparing to report its fourth quarter financial data after the closing bell on Tuesday. Investors should be prepared for a set of chaotic results, reflecting a difficult 2022.

The plunge in cryptocurrency prices and declining interest in digital assets among investors has wreaked havoc on Coinbase shares (stock symbol: COIN), which have fallen by nearly two-thirds in the past year. The platform still relies heavily on the fees associated with trading tokens to generate revenue, so the bottom line has taken a hit as lower prices have discouraged its core audience of retail investors.

Regulatory pressure on the cryptocurrency industry, which has been building since the collapse of rival exchange FTX in November amid allegations of fraud, is another concern. Federal agencies have targeted competitors in recent weeks, scrutinizing interest-bearing “staking” services and stablecoin products.

Coinbase is also in on those areas, which raises the potential for potential legal issues, but you wouldn’t know that by looking at stock movement this year.

Despite the long-term decline, stocks are up 80% so far in 2023. A rebound in

bitcoin

Prices and a greater willingness among investors to buy riskier assets are partly to blame. So are the traders who have bet on Coinbase, selling the stock so aggressively that upward moves in price can cause a rush to close out those positions. This phenomenon, known as short pressing, is what fueled GameStop (GME)’s incredible rally during the stock meme craze in early 2021.

Analysts surveyed by FactSet expect Coinbase to report a fourth-quarter loss of $2.52 per share on revenue of $588 million. This would be the group’s lowest revenue number since the end of 2020. Coinbase has already warned investors to expect an annual loss of up to $500 million excluding interest, taxes, depreciation, and amortization.

As usual, the stock is likely to go up or down if the loss is much less or more than expected. The fact that Coinbase stock is being massively shorted could exacerbate moves in either direction.

Emphasis will also be placed on other elements of the results. Retail volumes should give analysts a good idea of ​​the trends in the crypto market in general. Wall Street will also be interested in net interest income — how Coinbase benefits from USD stablecoins and cash in a higher interest rate environment — and any growth in its subscription and services business, one of the pillars of its diversification efforts.

Coinbase stock fell 3% early Tuesday afternoon, while

Standard & Poor’s 500

has decreased by 1.7%.

Write to Jack Denton at [email protected]