Coinbase Global Inc.
What Happened: During the company's third-quarter 2024 earnings call, the management was asked whether they would pursue a reserve strategy akin to MicroStrategy, a Bitcoin investment company, with over $18 billion worth of the asset on its balance sheet.
Alesia Haas, the Chief Financial Officer, informed that the company does maintain a cryptocurrency investment portfolio on its balance sheet, the fair market value of which was about $1.3 billion at the end of the third quarter. This amounted to nearly a quarter of Coinbase's total cash balance.
"You can see more detail in our filings, but we hold Bitcoin in addition to Ethereum and a mix of other cryptocurrency assets. These are intended to be long-term investments," Haas added.
The CFO clarified that Coinbase functions as an operating company rather than an investment company and needed cash on hand for various capital requirements. Having said that, the firm looked for "opportunities" to expand its operations and broaden its cryptocurrency holdings in the future.
Why It Matters: Coinbase reported Q3 revenue of $1.21 billion after the market close on Wednesday, missing the Street consensus estimate of $1.26 billion. Additionally, earnings came in at 28 cents per share, lower than analysts' estimate of 42 cents per share.
The company's board authorized its first stock buyback program, providing for the repurchase of up to $1 billion of its outstanding Class A common stock without expiration.
Price Action: Coinbase stock plunged 4.84% in after-hours trading, after closing down 3.61% to $211.74 during Tuesday's regular session.
