Shares of Coinbase Global (COIN 5.68%) rose over 35% this week, according to data from S&P Global Market Intelligence. The leading cryptocurrency trading platform had strong earnings in the fourth quarter and 2023. With prices of cryptocurrency, such as Bitcoin, soaring again, investors have piled back into Coinbase -- and quickly. Bitcoin prices are currently over $52,000 but still below all-time highs.

As of 11:30 a.m. ET on Friday, Feb. 16, Coinbase shares are up 192% in the last 12 months. Here's why the stock was soaring yet again this week.

Rising interest income

Coinbase is a place where people can buy and sell cryptocurrencies like Bitcoin. However, this segment actually saw declining revenue in 2023, falling from $2.36 billion in revenue in 2022 to $1.52 billion in 2023.

So, why were investors excited about Coinbase's earnings? Because of its rapidly growing subscription and services revenue. The segment posted $1.4 billion in revenue last year, up from $793 million in 2022.

However, the name of this segment is a bit misleading, as the majority of its revenue comes from stablecoin interest income and standard fiat interest income. These two line items were the majority of Coinbase's growth in 2023 and were mainly due to rising interest rates across the economy, something outside of its control.

2023 was not a profitable year for Coinbase, which posted an operating loss of $162 million. But in Q4, the company finally flipped to profitability, with an operating income of $115.6 million. Investors were likely enthusiastic about this news, sending shares higher in response.

Concerns on the horizon?

Coinbase improved its financials in 2023, but there are some looming concerns for this business. The United States just approved Bitcoin exchange-traded funds (ETFs), which have come out with annual fees of 0.25% or lower. This is much lower than the fees when buying cryptocurrencies on the Coinbase platform, putting some pressure on its pricing for consumers. If you can buy exposure to Bitcoin with lower transaction costs in your traditional brokerage account, why would you need Coinbase?

Despite these potential risks, Coinbase stock trades at a nosebleed earnings multiple. Its forward price to earnings (P/E) is sky-high due to continued profitability concerns, and its enterprise value-to-EBITDA (earnings before interest, taxes, depreciation, and amortization) is 35. This adjusted number is still above the average P/E for the S&P 500.

This looks like a high-risk stock trading at a multiple reserved for durable blue chip companies, making Coinbase a must-avoid for investors at the moment.