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On Monday, cryptocurrency exchange operator Gemini reported its first financial results as a public company, and they were disappointing. Quarterly losses exceeded analysts' estimates, leading to a significant decline in the stock price in after-hours trading.
Financial Results and Losses
According to the report, the company suffered a net loss of $159.5 million in the third quarter. The main contributing factors were increased IPO-related expenses, rising marketing costs, and a sharp increase in stock-based compensation. On a per-share basis, this resulted in an adjusted loss of $1.81, significantly exceeding the consensus estimate of $0.82, according to MarketBeat.
Market Reaction
On the back of this news, GEMI shares fell 12% in after-hours trading, continuing the sell-off that began with their September debut. According to Google Finance, the company's share price has halved since its initial public offering. Shares closed Monday at $16.84, up about 4% in regular trading, but fell to $15.80 in the after-hours, down about 6%. Shares traded in a range of $16.11 to $17.23 during the day, giving the company a market capitalization of approximately $1.98 billion.
Operating Expenses and Revenue
The decline in numbers reflects market concern that Gemini's losses continue to exceed revenue. The company's operating expenses rose to $171.4 million, while net revenue was only $49.8 million for the quarter. Despite sales more than doubling compared to last year, Gemini still trails its main competitor, Coinbase, whose net revenue often ranges from several hundred million to over $1 billion.
Request for Comment
Decrypt has reached out to Gemini for comment on how it plans to achieve adjusted profitability in the face of rising expenses and losses.
In Conclusion
Therefore, the current situation in Gemini's stock market raises serious questions about the company's future and its ability to compete with more successful industry players.
