Coinbase posts a loss of $1.1 billion in the Q2 2022 earnings call. This has been their largest loss ever in a quarter since being listed as a public company. The exchange has prepared for this situation and a crypto bear market with billions of dollars in a war chest. However, if they do not control their losses, even that cash would not be enough.
Coinbase in trouble
In the last 24 hours, Coinbase’s shares have been down by more than 10% after they made the announcement of such a huge loss. It is now trading at $87.68 and is still up by 62% in the last 1 month. In Q2 2022, Coinbase saw a 30% decline in trading volume and a 35% decline in transaction revenue. The current market scenario, recession, high inflation, and low prices in the crypto markets can be considered as some of the primary reasons for this.
Coinbase hasn’t been seeing users leave their platform or invest using some other app. However, they are becoming inactive or more passive towards their crypto investments.
Coming back to the exchange Q2 announcement, they generated a revenue of $802.6 million, a drop of 45.1% from Q1 2022 and a 153.1% decrease on a y-o-y basis. The company faced more losses than the revenue it could generate in this quarter, and the main reason for that was the non-cash impairment charges due to low crypto prices.
How is Coinbase going to get through this?
Like every other crypto company, Coinbase is also laying off staff and streamlining its operations to ensure it can survive this bear market. In June, they reduced their staff count by 18% to ensure that product development is given the most priority. The exchange’s cost-cutting will take some time to show results, but they have optimized everything from employees, administration, and technology POV.
Coinbase’s new partnership with Blackrock, the world’s largest asset manager, might also turn out to be quite positive for the company. If we expect them to get only 0.01% of the AUM of Blackrock as business it will be nearly $100 billion. We could go even lower at 0.001%, but it will still be $10 billion.
What are your thoughts as Coinbase posts a loss of $1.1 billion in Q2 2022? And do you think they will survive the bear market? Let us know in the comments below. Also, if you found our content informative, do like and share it with your friends.