COIN pumps over 20% after Coinbase Q4 earnings call

Coinbase (COIN) stock soared over 20% in the last 24 hours, with the surge coming on the back of the firm’s fourth quarter (Q4) earnings call. The market has been watching to see how much Bitcoin exchange-traded funds (ETFs) first-month growth boosted Coinbase’s monthly active user count, considering the trading platform is the predominant custodian for BTC ETF issuers.

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Coinbase earnings call due on Thursday

Coinbase Global (COIN) held an earnings conference call on Thursday, February 15. In advance of the call, COIN stock has soared nearly 13% to trade for $179.66 as of 22:18 GMT. Post-call, the gains extended to over 20% to trade for $190.50 minutes after the release. The surge comes alongside interest as analysts looked to discover Coinbase’s user growth numbers over the past quarter. 

If history is enough to go by, the growth of Coinbase as a company has often correlated with Bitcoin price. Case in point, the first quarter of 2020, when BTC recorded a 100% return with its market capitalization surpassing the $1 trillion market for the first time ever. It comes as Bitcoin price is also correlated to user growth.

With Bitcoin price recording a surge of almost 15% over the past week, COIN stock has climbed nearly 40%, causing speculations of strong numbers when the US-based cryptocurrency exchange would report its Q4 results.

The consensus had leaned towards a strong revenue boost for Coinbase in Q4, with aggregated data from MarketWatch and FactSet anticipating a 22% increase from the Q3 earnings to $825 million. As it turned out, revenue beat expectations, with earnings of up to $1.04 per share, relative to the average analyst estimate of $0.02 per share, data according to FactSet shows. 

Based on an official statement from the company, the firm also recorded revenues of up to $953.8 million, which was higher than analyst expectations of $826.1 million.

The lion’s share of this chunk is associated with trading volumes citing custodial fees as Coinbase provides custody services for 8/10 BTC ETF issuers. These include Bitwise (BITB), Ark21 Shares (ARKB), Invesco Galaxy (BTCO), WisdomTree (BTCW), BlackRock (IBIT), Franklin Templeton (EZBC), Valkyrie (BRRR), and Grayscale (GBTC).

The issuers listed Coinbase for their Surveillance Sharing Agreement (SSA). This is a contract between crypto exchanges and regulators or market surveillance providers such as the SEC, to enhance the integrity and transparency of the cryptocurrency market by sharing trading data and information. Beyond custody services, the platform also works with the issuers on trading and financing, among other services.

The earnings call led to a pump in COIN shares, with the biggest source of revenue for Coinbase, being the money generated from retail trading.