Bitcoin crash crushes Coinbase. Stocks are dropping again

Latest / May 12, 2022 / DRPhillF / 0

The cryptocurrency brokerage posted a first-quarter loss late Tuesday with revenue down 27% from a year ago, missing Wall Street expectations. Coinbase shares fell more than 25% on Wednesday and reached an all-time low.

Coinbase stock is now down more than 75% this year and is trading 85% below its all-time high since November. Stocks have lost more than half their value in the past week alone.

The drop in Coinbase shares coincides with the massive decline in the value of Bitcoin, Ethereum and other cryptocurrencies over the past few months. Coinbase said in its earnings report that about 48% of its transaction revenue came from bitcoin and ethereum in the quarter.

As a result of the volatility, Coinbase reported a sharp decline in the number of users, trading volume, and assets from the fourth quarter.

“The first quarter of 2022 continued the trend of lower crypto asset prices and volatility that began in late 2021,” Coinbase said in a letter to shareholders. But the company added that Coinbase remains “more excited than ever about the future of cryptocurrency.”

However, investors appeared wary of new language in Coinbase’s quarterly earnings filing with the Securities and Exchange Commission that warned of the risks of bankruptcy.

“In the event of bankruptcy, crypto assets that we hold on behalf of our clients may be subject to bankruptcy proceedings and such clients may be treated as generally unsecured creditors,” the company said.

This could mean that customers will not be able to access the funds if Coinbase declares bankruptcy.

But Coinbase CEO Brian Armstrong tried to reassure customers and clear up any confusion about the bankruptcy talk. at Tweet series Late Tuesday night, Armstrong wrote that “your money is safe on Coinbase, just as it has always been” and added, “we have no risk of bankruptcy.”

Armstrong wrote that the company was required to include bankruptcy warning language due to “newly required disclosure of public companies holding crypto assets to third parties” as a result of SEC rules.

Coinbase is arguably the most popular cryptocurrency company. It sparked a lot of interest earlier this year for a strange (but noisy) Super Bowl ad that had nothing more than a QR code that hovered around the screen for 60 seconds.

Coinbase said in its earnings report that the announcement “led to significant improvements in our brand awareness, preference and buying thinking.”

Coinbase has also been busy adding other cryptocurrencies to its platform, such as Cardano. It has also launched a marketplace for non-fungible tokens (NFTs), digital assets that are becoming increasingly popular in the art and collectibles world.

However, none of this was enough to stop the massive slide in Coinbase stock.

The company went public last year through a direct listing on the Nasdaq and was immediately valued at nearly $100 billion. Coinbase’s market capitalization is now hovering around $15 billion.

Bitcoin crash crushes Coinbase. Stocks are dropping again - CNN, investment