Coinbase shares fall as user numbers and trading volume fall

Coinbase shares fell nearly 15 percent on Tuesday after the cryptocurrency exchange reported disappointing third-quarter revenue and a shrinking number of active users, a sign that feverish trading has calmed down.

Third-quarter revenue was $1.31 billion, up more than 300 percent from the same quarter last year but well below analyst expectations of $1.58 billion, according to S&P Capital IQ.

The results suggest a dramatic slowdown in crypto trading compared to the previous bumper quarter, when Coinbase reported net income of $1.6 billion.

Trading volume fell to $327 billion, down 29 percent from the previous quarter.

Coinbase, which listed publicly in April, also said the number of monthly retail transaction users - retailers who trade at least once a month, known as MTUs - in the quarter was 7.4 million in the previous quarter.

Net income was $406 million, beating consensus estimates of about $380 million.

“As our annual results to date have clearly demonstrated, our business is volatile,” the company said in a letter to shareholders, urging investors to take a “long-term” view of the crypto market.

“While we entered the third quarter with weaker crypto market conditions, driven by low volatility and declining crypto asset prices, market conditions improved significantly later in the quarter, which we continued to observe into the early part of the fourth quarter,” he added.

Coinbase has been embroiled in a public dispute with U.S. regulators as they assess how to govern free-roaming crypto markets, raising the potential for new curbs and compliance costs for crypto companies in the future.