Coinbase Shares Drop 11.20% Pre-Market After Q2 Revenue Misses by $1.5 Billion

Coinbase shares plummeted 11.20% in pre-market trading following the company’s second-quarter earnings report, which revealed a $1.5 billion revenue shortfall. This marked a 26% drop from the prior quarter and fell below investor expectations [1]. The decline was primarily attributed to a 39% drop in transaction revenue, which fell to $764 million quarter-over-quarter [1].

Subscription and services revenue also dipped by 6% to $656 million, despite efforts to reduce variable costs. Operating expenses surged by 15% to $1.5 billion, largely driven by a $307 million charge related to a data breach disclosed in May [1]. While the company reported a net income of $1.4 billion, this figure included $1.5 billion in pre-tax unrealized gains from strategic investments, as well as a $362 million gain from its crypto investment portfolio. On an adjusted basis, net income was only $33 million, with adjusted EBITDA at $512 million [1].

Coinbase also underperformed the broader crypto spot market. Global and US crypto spot trading volumes dropped by 31% and 32%, respectively, while its total trading volume fell 40% to $237 billion. The consumer segment was particularly hard-hit, with a 45% drop in volume to $43 billion. Consumer transaction revenue plummeted 41% to $650 million as activity shifted to low-volatility, simplified trades [1].

Institutional transaction revenue also declined by 38% in both volume and revenue. Although Base Chain activity increased, other transaction revenue fell 21% due to a decline in average revenue per transaction [1].

Despite the sharp drop in pre-market trading, Coinbase shares closed slightly higher on the previous trading day at $377.76. The steep decline in early trading signals a strong negative investor reaction to the earnings results [1].

Amid declining revenues and rising costs, Coinbase is doubling down on innovation. In early July, the company rebranded its Wallet as the Base app, positioning it as a crypto-focused “everything app” that combines trading, social media, USDC payments, mini-apps, and tokenized posts [1]. Launched at its “A New Day One” conference, the app runs on Coinbase’s Ethereum Layer 2 network and integrates Farcaster for social feeds, Zora for post tokenization, and encrypted XMTP chat. Users can earn tips, interact with AI agents, and make one-tap payments [1].

The platform also introduced Base Pay for Shopify merchants and plans to offer 1% USDC cashback for users in the US. While the app is currently in beta, a full public release and developer tools are expected soon [1].

Source: [1] Coinbase Tanks 11% Pre-Market After $1.5B Q2 Revenue Miss (https://coinmarketcap.com/community/articles/688d08a765ae436726eabf8b/)