Coinbase Loses $1.1 Billion As Crypto Trading Volumes Drop

Cryptocurrency exchange Coinbase said its revenue plummeted 61% in the latest quarter due to falling cryptocurrency prices and declining trading volumes.

The San Francisco-based company on Tuesday reported an after-tax loss of $1.1 billion against the $1.6 billion net profit it registered in the midst of the crypto boom. A year ago. It said this $446 million loss reflects a loss charge for electronic money and venture investments.

Coinbase shares fell 4% in after-market trading, having lost nearly 11% earlier in the day.

The crash of bitcoin and other crypto prices sent the company into the red in the first quarter, leading to Dismissal 18% of its employees in June. With trading volume down another 30% from a weak first quarter, it incurred an operating loss of $620 million before calculating the loss, and its net cash flow dropped by about $400 million, to $2.8 billion left.

In an effort to assuage Wall Street’s concerns about its financial well-being in the midst of what it calls a crypto “winter,” Coinbase has released more information about its coin burn and for know they have not experienced any credit losses yet, despite the financial stresses that are affecting several other crypto companies.

Along with making long-term debt payments at lower interest rates, Coinbase believes its $6.2 billion in available capital will allow it to continue investing during a downturn, CFO Alesia Haas said. . She added that Coinbase still believes it can stick to its previous plan of keeping this year’s loss on earnings before interest, taxes, depreciation and amortization no more than $500 million.

However, the company also faced questions from analysts about increasing non-cash losses, with a net loss of $1.52 billion in the first six months, or 77% of revenue. in the quarter.

Stock-based bonuses for employees equaled 48% of revenue in the most recent quarter, and Coinbase expects them to continue at the same rate in the current quarter before dropping back next year.

Haas said the company understands investor concerns about stock-based pay and has “fitted” with shareholders on the matter. But she also said Coinbase has a more long-term view of the costs given the volatility of the crypto market.

At $46 billion, volume traded on behalf of retail customers has fallen by more than two-thirds year-over-year. Despite the debacle, it maintained that recessions are part of a typical cycle in the crypto market and said its analysis “suggests [retail] customers will not leave the Coinbase platform.”

Coinbase reported net sales of $803 million for the quarter and a loss per share of $4.98. Wall Street had expected a loss of $2.65 a share on revenue of $832 million.

Stocks have been volatile in recent days, up more than 30% last week thanks to League with BlackRock. They gave up two-thirds of their gains before Tuesday’s earnings announcement.

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