Gemini Shares Drop in After-Hours Trading as First Earnings Since IPO Reveal Rising Costs

Crypto exchange operator Gemini reported its first financial results as a public company on Monday, revealing a deeper-than-forecast quarterly loss that pushed its stock lower in after-hours trading.

The company posted a $159.5 million net loss for the third quarter, driven by higher IPO-related expenses, heavier marketing outlays, and a jump in stock-based compensation, according to its shareholder letter.

On a per-share basis, that translated into an adjusted loss of $1.81, missing the consensus estimate of a $0.82 loss, according to MarketBeat data.

GEMI shares fell as much as 12% in post-market trading, extending a selloff that has halved the company’s stock price since its September debut, Google Finance data shows.

The stock closed Monday at $16.84, up about 4% during regular trading, before slipping to $15.80 after hours, down roughly 6%. It traded between $16.11 and $17.23 intraday, ending with the company’s market capitalization of about $1.98 billion.

The decline reflected market concern that Gemini’s losses continue to outpace revenue, with operating expenses rising to $171.4 million against $49.8 million in net revenue for the quarter.

While sales more than doubled from a year earlier, Gemini remains a fraction of major rival Coinbase’s size, which often posts net revenue of several hundred million to more than $1 billion.

Decrypt has reached out to Gemini for comment on how it anticipates achieving adjusted profitability.

A look on the bright side

Still, net revenue rose 52% from the prior quarter, coming in slightly above the $47.4 million consensus estimate compiled by Yahoo Finance, helped by increased trading activity and stronger contributions from staking, custody and the company’s expanding credit-card business.

Transaction revenue climbed 26% to $26.3 million, while services revenue surged 111% to $19.9 million. Trading volume reached $16.4 billion, its highest level in several years, driven largely by a pickup in institutional activity.

Gemini’s credit card delivered a standout performance, surpassing 100,000 open accounts and generating more than $350 million in quarterly spend, more than double the previous period.

“Together, these results were a reflection of our strongest quarter of user acquisition in over three years,” the letter reads.

Earlier this month, the company filed to launch a prediction-markets business, seeking approval to list event contracts tied to outcomes such as sports results or political elections.