Crypto exchange giant Coinbase on 25th February 2022 released its Q4 revenue report, besting investors’ estimates. The report caused quite a stir when it revealed that it had exceeded Wall Street’s expectations for fourth-quarter revenue by nearly $500 million.
It also generated curiosity about the firm’s actual revenue. On the same day of the release, Sam Bankman-Fried [SBF], chief executive officer of competitor exchange FTX, tweeted, saying “I’m confused how they beat expectations by much, their volume is public.”
Leading journalist, Frank Chaparro in his Twitter thread reflected in detail on the firm’s Financial report. At first glance, the reporter pointed out that multiplying the average fees on the take rate activity+ trading volumes should give the real picture of the firm’s 90% earnings.
With regards to the SBF’s tweet that Coinbase publicly releases data on volumes, Chaparro noted that not everything is in the public domain. While the bulk’s share is made public via an API [$459 billion], that figure does not capture Coinbase’s total volume of $547 billion.
According to a spokesperson, the difference represents the volumes Coinbase brought in through institutional trading offerings: its over-the-counter trading desk and prime brokerage unit Tagomi.
That combined with the fee disparity that retail traders pay versus what institutional ones pay could explain why Wall Street’s estimates fell short.
Coinbase warned that trading volume could decline in the current quarter following a 20% drop in crypto market cap, this year. It also portrayed a hazy outlook for the full year citing macroeconomic headwinds and geopolitical instability. The company’s shares witnessed a near 5% fall in after-hours trading.
Coinbase Super Bowl Ad Controversy
Moving past the nitty-gritty of corporate finance, the boss of the crypto platform found himself in hot water this week after he allegedly gave his company credit for coming up with its viral Super Bowl commercial – only for an ad agency to reveal that they had initially pitched the idea several months earlier.
The trading platform generated a great deal of buzz for its Super-Bowl TV commercial. The ad offered new users $15 in free Bitcoin if they signed up for Coinbase by Feb. 15.