Bullish Stock Stumbles as Core Trading Revenue Slides Despite Record Q3

While the digital asset exchange posted record Adjusted Revenue of $76.5mn (up 72% year-on-year) and Adjusted EBITDA of $28.6mn, investors were spooked by a noticeable slump in the platform's transactional engine. Adjusted transaction revenue fell to $26.7mn from $32.9mn a year ago, suggesting that while the company is monetizing ancillary services, its core exchange business lost momentum in the third quarter.

The sell-off, which saw the stock briefly fall as low as $34.50, reflects valid concerns over the quality of earnings. The headline growth was driven largely by a 300% surge in "Subscription, Services & Other" (SS&O) revenue, primarily from stablecoin and tokenization services, rather than trading volume, which saw total digital asset sales drop to $41.6bn from $54.2bn. 

While Cantor Fitzgerald analysts Brett Knoblauch and Gareth Gacetta maintained an 'Overweight' rating, they lowered their price target to $56, citing compressed multiples across the peer group. Meanwhile, VanEck’s Matt Sigel offered a sharper critique, warning that 'management gave no near-term revenue lift' despite the options volume, and noting that non-trading revenue remained 'basically flat'. 

However, the smart money may already be positioning for a rebound; filings reveal that Cathie Wood’s Ark Invest bought $10.2mn of shares on Monday, effectively front-running the earnings dip.

However, the stock staged a recovery later in the session, climbing back above $36.00 as the market digested forward-looking guidance. 

CFO David Bonanno moved to calm fears of a sustained slowdown, stating that the fourth quarter had already seen a sharp reversal in fortune, with spot trading volume up 77% quarter-to-date. CEO Tom Farley reinforced the pivot to infrastructure, arguing the firm is "squarely positioned" to capitalize on the tokenization of real-world assets, which he described as being only in the "first inning".