Coinbase Global Shares Declined by 30% in May: Here’s Why
The leading crypto exchange is freezing hiring while assessing market conditions.
S&P Global Intelligence data shows Coinbase Global shares plummeted by 30.7% over the past month. Moreover, the crypto exchange had its shares losing 69% YTD. That comes as the broad financial spectrum saw continued weakness.
What Happened
Coinbase had announced deteriorated results for its 2022 Q1. Revenue recorded a 35.2% YoY to $1.16 billion, while the firm booked $554.4 million in operating losses. That reversed the $987.7 million operating income seen in 2021. Net loss amounted to $429.7 million, higher than $301.9 million last year. Also, fresh cash flow fluctuated from $3.4 billion inflows in 2021 Q1 to 2022 Q1’s $840.4 million outflows.
Coinbase growth remains in doubt, with investors terrified by the latest Terra stablecoin crisis that had the sister crypto LUNA crashing towards zero. TerraUSD should keep the $1 value at all times to maintain the US dollar peg. However, the peg unwound early the previous month, triggering relentless falls for LUNA and the stablecoin.
Administrators attempted to resurrect the assets by restarting the platform, but nothing seemed to work. Such developments severely dented confidence as most crypto investors incurred massive losses following Terra and LUNA collapse.
What Next
The company cautioned investors about its financials’ volatility as crypto is a new asset class susceptible to sudden and sharp price fluctuations. Therefore, quarterly outcomes could fluctuate intensively depending on crypto adoption levels. Adverse events like the Terra’s sent fear waves within the cryptocurrency community, translating to declined trading volumes as market players assessed their losses.
Coinbase saw a quarter-over-quarter decline in MTUs (monthly transacting users) to 9.2 million from 11.4 million, albeit an over 50% YoY surge from 2021 Q1’s 6.1 million. Traders seem to avoid the marketplace, with trading volumes losing 43.5% quarter-over-quarter plus 7.8% YoY.
Nevertheless, Coinbase continued to boost its capabilities amidst the volatility. The company added 27 assets for trading and 40 for custody while introducing Coinbase Pay, enabling the connection between fiat currencies and cryptocurrency wallets.
Moreover, the company collaborates with Visa to allow Visa debit card payouts, targeting global reach. Also, Coinbase pauses hiring as it analyzes market conditions to introduce strategies for sustainable future growth.
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