Coinbase stock slides to all-time low as crypto trading tumbles

Coinbase Global Inc. posted a loss in its latest quarter and reported lower-than-expected revenue as it lost 2.2 million crypto traders from its platform, citing the impacts of lower volatility and crypto asset prices.

Coinbase COIN Stocks,
-12.60%
were down 16% in after-hours trading on Tuesday after slipping about 13% in the regular session. They had been trading at lower prices than any regular trading session since the company went public just over a year ago.

Coinbase’s net revenue for its first quarter fell to $1.17 billion from $1.60 billion a year earlier, when analysts had modeled $1.50 billion.

The decline in revenue came as volume slowed. Coinbase reported trading volume of $309 billion for its March quarter, compared to $547 billion in the December quarter and $335 billion in the March quarter a year earlier. Retail transaction volume was $74 billion, down from $177 billion in the December quarter and $120 billion a year earlier.

The company had 9.2 million monthly transacting users, up from 11.4 million in the December quarter.

“We believe these market conditions are not permanent and we remain focused on the long term. In fact, our investment in our business now is particularly critical – these periods of low volatility can provide the opportunity to focus more intensely on product development (as opposed to peak periods, when we are more focused on customer satisfaction). high demand),” the company said. said in its letter to shareholders.

The company also reported a first-quarter net loss of $430 million, or $1.98 per share, compared to net income of $388 million, or $3.05 per share, in the year-ago quarter. . Analysts tracked by FactSet had expected a loss of 1 cent per share on a GAAP basis.

Coinbase previously decided to make 2022 an “investment year,” and the company continues to prioritize capital spending amid a tougher business climate.

“We are very confident that we could choose profitability over reinvesting in the business,” CFO Alesia Haas said on Coinbase’s earnings call, but the company sees opportunities to invest in areas such as non-fungible tokens (NFTs) and international growth.

“We could have done more sequentially, we could have moved more slowly and focused on profitability, but we have the resources,” she continued. “We have a disciplined approach to managing our business through peaks and valleys.”

Coinbase revealed that 24% of its overall volume in the last quarter was concentrated in bitcoin BTCUSD,
-0.54%,
with 21% in ethereum ETHUSD,
-0.33%
and the rest in other assets. This compares to concentrations of 16% in each bitcoin and ethereum during the December quarter.

While Coinbase acknowledged the “softness of the market,” it said it was seeing encouraging trends, such as the growing adoption of investment-free products. Around 5 million Coinbase monthly trade users engaged with an investment-free product during the quarter, with staking being the most popular option.

“Our thesis of no longer being a trading platform to enable the whole crypto economy and being this primary financial account for people is really starting to work,” the CEO said. Brian Armstrong on the call.

The report follows a sharp drop in Coinbase shares, which have lost 55% over the past month as the S&P 500 SPX,
+0.25%
lost 11%. The company revealed that it saw “a continued decline in crypto asset volatility and crypto asset prices” during the month of April.

For the second quarter, Coinbase expects users transacting monthly and total trading volume to be lower than what was seen in the first quarter. Coinbase also expects revenue from subscriptions and services to be similar to or slightly lower than what the company saw in the first quarter.

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