Gemini Space Station Inc. (GEMI.US), the cryptocurrency exchange founded by Tyler Winklevoss and Cameron Winklevoss, reported a loss in its first earnings report post-IPO that exceeded analysts' expectations.
According to Zhitong Finance, Gemini Space Station Inc. (GEMI.US), a cryptocurrency exchange founded by Tyler Winklevoss and Cameron Winklevoss, reported losses exceeding analysts' expectations in its first earnings report post-IPO. Gemini went public in September, and its stock price has nearly halved from its peak due to the overall decline in cryptocurrency prices.
The company reported third-quarter revenue of $50.6 million, surpassing analysts’ expectations of $46.2 million, while posting a loss per share of $6.67 compared with the expected loss of $3.24 per share.
Following the release of the earnings report, the company's shares plummeted over 12% during after-hours trading. As of this writing, the stock fell 7% in extended-hours trading. Factors contributing to increased spending include initial public offering (IPO) costs, large-scale marketing campaigns, and other expenses.
Chief Financial Officer Dan Chen stated on the earnings call, "We believe the company’s spending growth is strategic and controllable."
Cameron Winklevoss noted during the conference call that the company aims to create a 'super app' offering services beyond just cryptocurrency trading. Recent reports suggest that as part of this strategy, Gemini plans to introduce prediction markets, allowing users to place bets on sporting events, political outcomes, and more.
Winklevoss stated that the company plans to launch its own regulated prediction market exchange following regulatory approval.
"We are very optimistic about these markets, which are still in their early stages, reminding us of Bitcoin's state back in 2012," said Cameron Winklevoss. "We are working hard to bring this to global markets."
Driven by a favorable regulatory environment fostered under the Trump administration, trading activity in cryptocurrencies rebounded, doubling the company’s revenue compared to the same period last year. Approximately half of Gemini's revenue comes from cryptocurrency trading fees, with additional income generated through credit card programs, cryptocurrency staking, and other services.
This revenue scale is equivalent to only about 2% of its main competitor Coinbase Global Inc.'s (COIN.US) revenue in the most recent quarter. However, Gemini is growing faster than Coinbase, whose adjusted sales increased by 55% year-over-year in the third quarter. Another U.S. competitor, Kraken, stated that its revenue more than doubled during the same period.
Gemini is smaller than Coinbase and Kraken and is currently still in a loss-making state. For instance, Goldman Sachs estimates that the company will not achieve adjusted profitability until 2028. At present, Gemini's expenditure growth has outpaced its revenue growth.
In an October report, Goldman Sachs analysts noted that Gemini had begun offering trading services for blockchain tokenized U.S. stocks and was expanding its credit card business, although this move 'poses credit risk and interest rate risk during economic downturns.' During an earnings call, the company stated that its credit card, which allows users to earn cryptocurrency rewards while spending, has become a key driver of new user growth on the platform.
Meanwhile, the Winklevoss brothers have significantly increased their political activity, actively supporting Donald Trump. In August, they announced a $21 million donation to a political action committee supporting the Republican Party and the president’s crypto agenda. The brothers have also attended multiple presidential events, including a recent gathering for donors to the president’s new White House banquet hall.
