Original Article Title: "Stock Price Plunge, What Secrets Did Coinbase's Financial Report Reveal?"

Original Article Author: 1912212.eth, Foresight News

On August 1st, the largest US cryptocurrency exchange Coinbase released its second-quarter financial report, disclosing that in Q2 of this year it achieved a net profit of $1.43 billion, far surpassing the $36 million from the same period last year. The total trading volume was $237 billion, slightly higher than the $226 billion from the same period in 2024. Compared to the previous quarter, trading revenue decreased by 39%, and spot trading volume decreased by over 30%. It is worth noting that the previously exposed user data breach event ultimately resulted in a $307 million loss.

After the financial report was released, according to Stock Market Data, its stock price plummeted by over 9% to $377.7 in after-hours trading, and then continued to decline in the following days, hitting a low of $314.

Significant Year-over-Year Drop in Spot Trading Volume, BTC Holdings Exceed 11,000 Coins

Coinbase's latest financial report shows that its total revenue in Q2 of this year was $1.5 billion, showing some year-over-year growth but falling short of analysts' expectations of $1.59 billion. The net profit was $1.4 billion, but this mainly included $1.5 billion in unrealized gains from strategic investments and $362 million in unrealized gains related to crypto assets. Excluding the above impacts, the adjusted net profit was $33 million.

In terms of major revenue contributors, Coinbase mainly has three revenue sources: transaction revenue, subscription revenue, and other.

Transaction revenue was $764 million, a 39% year-over-year decrease, well below market expectations. The overall trading volume decreased by 40% compared to the previous quarter, with retail trading down 45% and institutional trading down 38%. Retail trading revenue was $650 million (with a $43 billion volume), institutional trading revenue was $60.8 million (with a $19.4 billion volume), and other trading revenue was $5.4 million. The number of trading users in the second quarter decreased by 1 million compared to the previous quarter, falling to 8.7 million. However, the main factor was the emotional panic of existing users, with a 38% decrease in average transaction size per person, resulting in dismal trading volume.

Subscription and Service Revenue: $656 million, a 6% decrease compared to the previous quarter. Stablecoin revenue (mainly USDC) was $333 million (a 12% increase compared to the previous quarter), with an average USDC balance of $13.8 billion on the Coinbase platform and $47.4 billion off the platform.

The staking rewards were $145 million (a 26% decrease from the previous period), interest and transaction revenue amounted to $59.3 million (a 6% decrease from the previous period), and other subscription and services revenue reached $120 million (a 15% decrease from the previous period).

As of the end of the second quarter, Coinbase held $9.3 billion in US dollar-denominated assets, a decrease of $590 million from the previous quarter, representing a 6% decline. This decrease was primarily due to an increase in fiat currency loans and the purchase of our crypto asset portfolio. Cash and cash equivalents stood at $1.449 billion, USDC (net) at $1.784 billion, money market funds at $5.98 billion, and third-party platform cash at $110 million.

According to an official tweet, Coinbase purchased 2,509 BTC in the second quarter, bringing the total BTC holdings to 11,776 BTC, with a total cost of $740 million and a current value of $1.26 billion.

Frenzied Acquisitions, Diversified Business Development

As a US-listed company exchange, its current product line includes the Coinbase main platform, Coinbase Pro (now Coinbase Advanced), Coinbase Wallet, Coinbase Card, Coinbase Earn, Coinbase Cloud, etc., covering retail and institutional customers, trading and custody, DeFi, and payments.

Moreover, recently, Coinbase has ramped up its acquisition efforts, entering multiple fields. On July 29, Bloomberg reported that Coinbase is in advanced talks to acquire the Indian crypto exchange CoinDCX but was soon denied by CoinDCX CEO Sumit Gupta, stating that the company is not for sale.

On July 11, Coinbase completed a talent acquisition, specifically acquiring Opyn's CEO Andrew Leone and its research director Joe Clark. Leone and Clark will now join the Onchain Markets team, which operates within Coinbase's institutional arm, focusing on validated pools and other on-chain market product development plans.

However, the biggest acquisition event occurred in May this year when Coinbase officially confirmed the acquisition of the cryptocurrency options platform Deribit to unify spot, futures, and options trading. The acquisition price was approximately $2.9 billion, including $700 million in cash and 11 million shares of Coinbase Class A common stock, further strengthening its presence in the options and derivatives market. Additionally, it recently acquired Liquifi (a token management platform), expanding its asset management and token issuance capabilities.

In addition, Coinbase has partnered with traditional financial institutions such as JPMorgan Chase, PNC Bank, American Express, to advance services like user deposits, rewards points redemption to USDC, etc.

According to Coinbase's financial report, Base is one of the largest distribution networks for USDC, with the majority of P2P transactions on Base being completed using USDC. Currently, the Base APP has entered public beta testing, with integrated features including wallet, trading, payments, social, gaming, DApp, etc. The latest data from growthepie shows that its active address count far exceeds OP and Arbitrum.

On the regulatory front, since the U.S. SEC withdrew its lawsuit in February of this year, in June of this year, Coinbase obtained a MiCA license in Luxembourg, authorizing it to provide core retail and institutional services in 30 European Economic Area member states, paving the way for its entry into the European market.

Future Bets on Prediction Markets, Tokenized Stocks

Coinbase's ambitions will continue to span multiple areas.

Today, Coinbase's Vice President of Product Max Branzburg revealed to CNBC that Coinbase is set to expand its services for U.S. users, creating an "all-around trading platform" that includes tokenized stocks, prediction markets, early-stage token sales, and other businesses. A video posted on Coinbase's official Twitter account also echoes this sentiment.

However, in the prediction market sector, Coinbase will face competition from Kalshi, which is currently the only federally licensed prediction market platform in the U.S., as well as the globally leading Polymarket—the company plans to re-enter the U.S. market after its recent acquisition of the licensed derivatives trading platform QCEX.

Furthermore, Coinbase's tokenized stocks product will also compete with similar products from Robinhood, as well as other cryptocurrency exchanges like Gemini and Kraken, but these companies' products are currently only available to non-U.S. investors.

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