Shares of Coinbase Global (COIN 0.31%) plunged 26% on Wednesday after the digital asset trading platform reported an unexpected loss in the first quarter.
Coinbase generated net revenue of nearly $1.2 billion. That represented a decline of 27% year over year and 53% sequentially. It was also significantly below Wall Street's estimates, which had called for revenue of almost $1.5 billion.
The brutal downturn in the cryptocurrency market in recent months has weighed heavily on Coinbase's business. The exchange operator's monthly transacting users declined by 19% compared to the fourth quarter. Its trading volume, in turn, fell 44% to $309 billion.
At the same time, Coinbase spent heavily to fund its growth initiatives. Declining sales combined with rising expenses led to the company posting a net loss of $430 million, compared to net income of $840 million in the fourth quarter and $771 million in the year-ago period. That resulted in a net loss per share of $1.98. Analysts had expected Coinbase to report per-share profits of $0.17.
With the prices of Bitcoin (BTC -2.42%), Ethereum (ETH -4.08%), and many other cryptocurrencies declining further so far in the second quarter, Coinbase warned of a continued deterioration in its transacting user and trading volume metrics. Yet the company plans to sustain its investments in the build-out of its non-fungible tokens (NFTs) marketplace and crypto derivatives exchange, so expense levels are projected to remain relatively high. Thus, investors are concerned that Coinbase could rack up more losses in the quarters ahead.