What Happened?
Shares of blockchain infrastructure company Coinbase (NASDAQ:COIN) jumped 16.3% in the morning session after investors appeared to look past disappointing fourth-quarter results suggesting expectations were low heading into the announcement.
The blockchain infrastructure company missed Wall Street's expectations, reporting fourth-quarter revenue of $1.78 billion and adjusted earnings of $0.66 per share. However, the market's positive reaction was likely driven by the company's cash generation. Coinbase reported a staggering $3.07 billion in free cash flow, marking a dramatic turnaround from a cash outflow in the previous quarter.
This figure, equivalent to a 172% margin for the quarter, demonstrated robust underlying profitability that overshadowed the headline misses and signaled strong financial health to investors. That the company is buying back its own shares is a sign of confidence and a signal to the market that Coinbase management believes the stock is currently undervalued.
The earnings call was also optimistic. For example, management noted that despite softer market conditions entering the first quarter, there has been net buying each week since. There has also been a positive mix shift toward advanced products and more trading volume coming from Coinbase One users, which reached almost 1 million.
Looking ahead, Coinbase's forward guidance was anchored by its focus on expanding the Everything Exchange, deepening stablecoin utility, and accelerating the adoption of onchain products. Armstrong emphasized, "Our priorities for 2026 are to grow the Everything Exchange, scale stablecoins in payments, and bring the world onchain," signaling a strategic pivot toward broader financial services and embedded crypto infrastructure.
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What Is The Market Telling Us
Coinbase’s shares are extremely volatile and have had 53 moves greater than 5% over the last year. But moves this big are rare even for Coinbase and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 7 days ago when the stock gained 9.5% on the news that the price of Bitcoin rebounded from a significant drop, sparking a relief rally across crypto-related stocks.
The move followed a sharp sell-off in which Bitcoin sank to its lowest level since October 2024, trading just above $60,000 before recovering to around $66,900. This bounce provided a lift for crypto-linked companies that had been sold off sharply. The recovery occurred despite some negative sentiment in the preceding days. For instance, news emerged that Cathie Wood's ARK Invest had offloaded approximately $17.4 million worth of Coinbase shares, its first sale of the stock in 2026. The broader cryptocurrency market had faced a months-long dip, adding to the pressure on companies with significant exposure to digital assets.
Coinbase is down 30.8% since the beginning of the year, and at $163.63 per share, it is trading 61% below its 52-week high of $419.78 from July 2025. Investors who bought $1,000 worth of Coinbase’s shares at the IPO in April 2021 would now be looking at an investment worth $498.45.
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