Coin Stock Pops 6% on $2.9B Deribit Deal, But Falls Back Post Coinbase Earnings
With major indices rising and Coinbase shares briefly rising before falling after earnings, the second half of the week gave U.S. markets...
Quick overview
- U.S. markets showed renewed optimism late in the week, with major indices rebounding and Coinbase shares briefly soaring after earnings.
- Coinbase announced a $2.9 billion acquisition of Deribit, enhancing its position in the cryptocurrency derivatives market.
- Despite a strong revenue increase, Coinbase's Q1 earnings report fell short of analyst expectations, leading to a decline in stock price after hours.
- The mixed fundamentals raise concerns about Coinbase's profitability, as investors watch to see if the stock can maintain its value above $200.
With major indices rising and Coinbase shares briefly rising before falling after earnings, the second half of the week gave U.S. markets fresh optimism.
Market Sentiment Improves Late in the Week
After a choppy start, U.S. equities regained momentum midweek, with major indices posting two consecutive days of gains. One standout was Coinbase (COIN), whose share price surged past $200, hitting its highest level since March, amid a broader recovery in sentiment and news of a major acquisition.
Coinbase Makes a Bold Bet on Derivatives
Coinbase made headlines with the announcement of its planned $2.9 billion acquisition of Deribit, a major player in the cryptocurrency derivatives space. This move reflects Coinbase’s deepening push into crypto futures and options, aiming to capture a growing segment of institutional trading.
Deribit began reviewing buyout offers back in January. Kraken reportedly declined to acquire it for $4–5 billion, setting the stage for Coinbase’s lower bid to be accepted months later. Factors behind Deribit’s decision to accept Coinbase’s offer remain unclear, but EU sanctions and operational shifts—including its exit from Russia—may have influenced the outcome.
Numbers in Focus: Coinbase Q1 Earnings
Coinbase’s after-hours performance reversed sharply after the release of its Q1 FY2025 earnings report, erasing earlier gains:
Key Financial Highlights:
Revenue:
- Q1 revenue came in at $2 billion, marking a 25% year-over-year increase
- However, this fell just shy of analyst expectations
Net Income:
- Reported at $66 million, down sharply from $1.2 billion in Q1 2024
Diluted EPS:
- Declined significantly to $0.24, compared to $4.40 during the same period last year
- Subscription & Services Revenue:
- Rose 37% to $698.1 million
- Forecasted to fall within $600 million to $680 million for Q2
Stock Reaction and Outlook – A Bearish Open Tomorrow
Coinbase stock closed the U.S. session around $207, before sliding 3.5% in after-hours trading to near $200. The earnings miss and sharp drop in EPS weighed on sentiment, even as the Deribit acquisition signaled strategic expansion
Conclusion: Momentum Meets Mixed Fundamentals
Coinbase’s acquisition of Deribit marks a significant strategic step, positioning it to dominate the crypto derivatives market. However, the disappointing earnings report raises questions about profitability in a volatile industry. Investors now turn to see whether the stock can hold above the psychological $200 level, or if earnings concerns will drag it back below. The next few sessions could be pivotal in determining the stock’s near-term direction.
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