Thank you for your continued support and engagement. Each week, we're sharing what companies we're researching and the what, the who and the how that we think makes the companies interesting and unique. This roundup is brought to you weekly by a group of interns, creative minds, artists and investors who believe that through best in class investing along with the democratization of financial education we can do great things together. Enjoy, Explore and Share.
U.S. equities came under significant pressure this week as disappointing megacap technology earnings, concerns over aggressive artificial intelligence spending, and escalating geopolitical tensions weighed on investor sentiment. The Nasdaq 100 was on track to enter its third technical correction of 2026, declining more than 10% from its recent peak as investors reassessed elevated technology valuations and the profitability of massive AI infrastructure investments. Alphabet shares tumbled 12% following weaker-than-expected advertising revenue, while Amazon declined as higher capital expenditures and slowing e-commerce growth overshadowed continued strength in its cloud business. Additionally, Intel plunged 26% after issuing disappointing guidance amid softer PC demand and supply-chain disruptions. More broadly, investors demonstrated increasingly limited tolerance for earnings misses, accelerating a rotation away from expensive technology stocks toward more attractively valued areas of the market.
Despite growing skepticism surrounding AI profitability, investment in the sector continued at an extraordinary pace. Meta expanded its planned equity fundraising to nearly $98 billion to support AI infrastructure development, while Microsoft sought at least $25 billion through a bond offering. SpaceX also secured a roughly $40 billion chip-financing agreement with Apollo, highlighting the substantial capital requirements associated with AI expansion. Meanwhile, Anthropic filed for an initial public offering, and Marvell entered advanced discussions to acquire Lumentum in a potential major data-center technology transaction. These developments underscored the growing disconnect between the industry's aggressive investment ambitions and investors' increasing demands for tangible returns on capital.
On the economic front, U.S. data remained surprisingly resilient. Third-quarter GDP expanded at a stronger-than-expected annualized rate of 3.4%, the fastest pace in a year, supported by robust consumer spending and business investment. Household consumption increased 3.8%, while business investment surged 12.7%, suggesting that underlying economic activity remains solid despite elevated borrowing costs and inflationary pressures. September durable goods orders also rose 1.8%, marking their strongest increase in five months, while UPS raised its full-year outlook ahead of the holiday shipping season.
The Federal Reserve also remained in focus following its October 27–28 FOMC meeting, where policymakers voted 10–2 to hold the federal funds rate steady at 3.75%–4.00%, following a 25-basis-point increase in September. Two officials dissented in favor of an additional quarter-point hike, highlighting persistent concerns about inflation. The Fed upgraded its assessment of economic activity, citing resilient consumer spending, robust capital investment, and stable labor-market conditions, but emphasized that inflation remains elevated. With policymakers signaling a continued data-dependent approach and markets anticipating the possibility of another rate increase in December, the prospect of interest rates remaining higher for longer added to concerns surrounding equity valuations and corporate financing costs.
Geopolitical developments added another layer of volatility as oil prices rebounded on renewed concerns that the United States could resume military strikes against Iran. Earlier optimism surrounding diplomatic negotiations briefly pressured crude prices, but escalating rhetoric and fears of supply disruptions subsequently supported prices. Tight refined-product inventories and continued Ukrainian attacks on Russian energy infrastructure added to supply concerns, raising the risk that sustained energy costs could reinforce inflationary pressures. Meanwhile, uncertainty surrounding the upcoming U.S. midterm elections remained in focus, with early voting reaching record levels. Separately, Binance reported a $6.3 billion security breach, intensifying scrutiny of digital-asset security and institutional adoption.
Looking ahead, investors will remain focused on the sustainability of corporate earnings, the profitability of AI-related capital spending, and the implications of the upcoming midterm elections. Developments in the Middle East and their impact on energy prices will also be critical to the inflation and monetary policy outlook. While resilient economic growth and consumer demand continue to provide a supportive fundamental backdrop, elevated valuations, tighter financial conditions, and geopolitical uncertainty suggest market volatility could remain elevated. Overall, the week's developments reflected a shift toward greater investor selectivity, with earnings execution, capital discipline, and tangible returns on investment becoming increasingly important drivers of market performance.
Friday's Close (Weekly Performance)
S&P 500 7,580.07 -0.57%
Nasdaq 25,437.00 -2.00%
Dow Jones 51,770.31 -0.85%
Thank you Blue Room Senior Analyst NICK PEART.
Brian Armstrong — Co-Founder and CEO
Our mission at Coinbase is to increase economic freedom in the world, and we're using frontier technology like crypto and AI to update the financial system and make it work better for everyone. Now, financial services is one of the largest markets in the world, and crypto is going to update all of it from trading to payments to tokenization.
And we're now seeing the biggest opportunity we've seen on the horizon with agentic finance. There will soon be more agents than humans in the economy, and they're going to need to trade on our behalf, pay for goods and services, and even raise money. Agentic finance is projected to process $3 to $5 trillion of transactions by 2030, and Coinbase is building the most AI-enabled financial account.
Today, we are the number one platform for crypto stored globally. We're the number one crypto spot exchange in the US. We have the leading distribution position for the number one regulated stablecoin, USDC. And we have this repeatable innovation culture, which is helping us spin up new product lines and diversify our revenue, which we'll talk about in a moment.
Now, the crypto market cap was slow in Q3, but we continued to execute well on the things that are in our control and compound gains. So prediction markets passed $200 million in annualized revenue. We had our 14th consecutive all-time high of USDC held in Coinbase products. We had our 4th consecutive quarter of crypto trading market share gains, and our 5th consecutive all-time high in Coinbase One paid subscribers. We doubled crypto trading volume market share since this time last year, so it's now at 10.7%. And this was driven by gains in both spot and derivatives.
And then one of our major assets, of course, is that we're the most trusted player in crypto, and that means that we store more crypto than any other company in the world. So it was great to see that we returned to our peak assets on platform market share. This included seeing some nice inflows from the ETFs.
And we hit an all-time high in USDC stored on Coinbase, despite a slight dip in the overall market cap of USDC. Just a reminder, we capture about 50% of all USDC economics, and our overarching goal here is just to keep growing stablecoin adoption globally.
Now, here's a reminder, our top 3 priorities in 2026. They were number 1, the Everything Exchange, number 2, stablecoins and payments, and number 3, on-chain. So I'll touch on each of these just briefly.
So the Everything Exchange, which is really the ability to trade every asset class on one platform, it's really now starting to work. So for example, derivatives volume grew 179% over the past 2 years. And we've been working hard on building out things like unified global liquidity, and relaunching Coinbase Pro, which is our product for advanced traders.
Prediction Markets are one of the fastest-growing products by revenue in Coinbase history, an important part of the Everything Exchange, and we saw 82% quarterly compound growth. Now, this has been growing even through slower months around sports, and this has been driven by things like crypto contracts, where we have a strong right to win. And so we're just going to continue to build great product here. We've been shipping good product around the 2026 midterms, for instance, and we got CFTC approval to list our own prediction market contracts now, which will improve our economics.
Now, customers who want to use the Everything Exchange with zero trading fees, they can subscribe to Coinbase One, and we've seen good progress here as well. You know, Coinbase One has grown 5 quarters in a row, even through tough market conditions, and there's lots of benefits to it. In addition to zero trading fees, customers can get better rewards on USDC, their Coinbase One card, staking, and more. So even if they're holding, let's just say, just $1,500 of USDC on Coinbase, the rewards from that alone pay for this membership. So Coinbase One subscribers are our most valuable customers with higher revenue per customer and strong trading retention.
Our second priority in 2026 was stablecoins and payments. And everyone's now leaning into stablecoins as a better form of payments. We now have top banks, payment service providers, and e-commerce players as customers. We just recently announced Citi, for instance, and we're seeing strong growth in total payment volume on CDP, which is our crypto infrastructure product.
Steve Huffman — Co-Founder and Chief Executive Officer
In Reddit's 21 years the internet has changed in ways that would have been impossible to predict. We've gone from flip phones to smartphones to personal AI agents. And through it all, Reddit has always owned our own corner of the internet, offering people something that no one else does. Social media has evolved from friends and families to followers and famous people, and from status updates to the mindless scroll. Web search is evolving from a gateway to the web to becoming an AI-powered destination itself.
While extraordinarily useful and powerful, AI search solves a different problem than Reddit. AI does not fulfill people's fundamental need for community, connection, and belonging with other people, and it lacks context and nuance. The Reddit experience captures the human experience in a way that no other platform can replicate. Only Reddit can help people navigate life's journey through the lens of other people's lived experiences. Only Reddit can help you feel both like a multifaceted, unique individual and a part of a greater whole, and do so without needing to reveal your real-world identity. That's why Reddit is, and always has been, a distinct and direct destination. People seek out Reddit because we meet a universal need they simply can't get anywhere else online. Our work now is about doubling down on what makes Reddit, Reddit and making Reddit more of a daily habit.
We come into that work with clear advantages and revenue momentum in the business. And you can see that in the exceptional commercial results we delivered in the third quarter. We generated 53% revenue growth, something few companies are doing. And it's even more significant when you consider that's on top of nearly 70% revenue growth last year. Those results in Q3 helped us cross $3 billion in revenue over the last 12 months. Our margins, which are already industry leading expanded across the board. Reddit's continued growth at scale is proof of the strength of our business, the demand for our platform, and the value we provide advertisers. And it's that consistent delivery of growth and profitability that earned us a place in the S&P 500 Index earlier this quarter.
Yes. While our business continues to grow significantly, Internet search and how people discover things online continues to change rapidly and significantly. Our search referral traffic was down meaningfully in Q3 with the decline accelerating later in the quarter. The biggest impact was on logged out and web traffic, but some of the impact flows through to logged in and app traffic since search referral is a common source of re-engagement for users. The company helped to offset the declines by both driving reach primarily through user marketing and also by continuing to improve the product. These declines have continued into the early part of Q4. During October, we have seen that search traffic has dropped by more than 1 million referrals on average per week. If this rate of decline continues, current trends would suggest that total DAUqs could fall in Q4 by a low double-digit percentage from our current base of 130 million DAUqs.
However, search referral trends do not determine our relevancy and they do not define our future. Logged-in and App DAU are our most valuable users and they are our primary focus. And we grew logged-in and App DAU sequentially. Together these make up the vast majority of engagement and over 80% of the monetization on Reddit. Growing this high-value audience speaks to the strength of Reddit as a destination. And this is what matters to the long-term health of our platform and our business.
So, as we look ahead, our strategy to make Reddit a direct daily habit for more people is simple: make Reddit awesome, grow community and belonging, and bring in new audiences. Making Reddit awesome means making it more relevant and easier to navigate, getting to personalization faster and creating fun new experiences on Reddit. This will both improve retention of new users and deepen engagement of our core users. Our work in ML feeds and app performance is delivering results. The percentage of new users who return the first week after installing the Reddit app is up double digits quarter-over-quarter and over 50% year-over-year. Video creation and consumption are both up as are chained video views. We'll continue our work in these areas in the coming quarters. And I'm particularly excited about some of the areas we'll be testing to make the core feed experience more consistent and predictable.
And to grow some of our new experiences like games and visual podcasts.
To grow community and belonging, we've been making it easier to create, grow, and contribute to communities on Reddit. This quarter, we've continued to grow the number of communities on Reddit and increase the contribution from our users. We added another 1 billion posts and comments to our corpus. Looking forward, our work will be to make subreddits more distinct, to deepen the sense of belonging by making joining subreddits more intentional and significant, and to make moderation much easier and more consistent by giving moderators AI-powered tools. This approach has helped our own enforcement team reduce the median time to action on violating content from 58 hours to 5 seconds this year.
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