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Coinbase goes up thanks to resurgence of interest in crypto

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Last Week’s Highlights

Coinbase reports first profit in two years

Coinbase Global has reported its first quarterly profit since 2021 due to sturdy trading volumes from a resurgence of interest in crypto. The approval of the first spot bitcoin exchange-traded funds (ETFs) by the U.S. Securities and Exchange Commission (SEC) in January has rekindled investor enthusiasm for crypto. Coinbase’s transaction revenue jumped 64% to $529.3 million in the fourth quarter, and it now expects a strong first quarter for its subscription and services unit. The company reported a profit of $273.4 million in the three months ended Dec. 31, compared with a loss of $557 million a year earlier. 

Roku forecasts quarterly loss

Streaming-service provider Roku released a forecast of a bigger first-quarter loss due to intense competition from rivals and weak customer spending on video streaming, which sent its shares down 15% last Thursday. The company expects a loss of 90 cents per share, while analysts were expecting a loss of 69 cents. The streaming industry is prioritizing profitability after years of chasing subscriber growth, with more focus on advertising revenue. Roku is facing competition from heavyweights such as Meta and Alphabet for advertising revenue. The company is also facing slow spending on media and entertainment promotions due to limited releases. Roku’s shares have fallen 4% since Tuesday after a media report said Walmart was in talks to buy the company’s rival Vizio for over $2 billion. 

Coming Up This Week

Applied Materials expects to take advantage of AI boom

Applied Materials, a semiconductor equipment supplier, forecasts better-than-expected Q2 revenue on strong demand for advanced chips used in artificial intelligence and a recovery in the personal computer market. The company reported Q1 revenue of $6.71 billion, beating estimates, and said China sales of $3 billion accounted for 45% of total revenue. The company expects Q2 revenue of $6.5 billion, plus or minus $400 million, compared with analysts’ average estimate of $5.92 billion. Applied Materials makes equipment that helps fabricate chips and counts Intel and Samsung among its customers. 

DoorDash’s labor costs affect its outlook

DoorDash, the food delivery company, reported a wider-than-expected loss for Q4. It has increased minimum pay for its delivery workers, following new regulations, which has increased its labor costs. To attract more customers, the company has been spending heavily on marketing and expanding its core restaurant delivery business. Although its total orders and revenue have risen, the company’s Q1 adjusted EBITDA is expected to be below Wall Street expectations. The company has underperformed its peers, and its shares fell over 8% after the earnings call. 

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Market News

On Friday, the U.S. stock market experienced a decline, with the Nasdaq index showing the largest decrease. The drop was due to a producer prices report that came in hotter than expected, which eroded hopes for an imminent interest rate cut by the Federal Reserve.

This decline marked the end of five consecutive weeks of gains for all three indexes. The S&P 500 ended at 5,005.15 points, losing 24.18 points or 0.49%. The Nasdaq Composite dropped to 15,775.65, losing 132.38 points, or 0.83%. The Dow Jones Industrial Average fell by 149.48 points or 0.39%, ending at 38,623.64.

Despite the decline, the S&P 500 closed above 5,000 for the fourth time this year, which was attributed to robust corporate earnings and surging enthusiasm around artificial intelligence.

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Microsoft-backed OpenAI hits $80B valuation.
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