Earlier this week, MovieUpdates’s Equity podcast noted the chaotic price movements of crypto assets and predicted that Coinbase earnings could facilitate or further complicate the path forward for startups in the web3 ecosystem later this week. If Coinbase reported strong numbers, it could allay some concerns about another crypto winter, or so the logic went.
That didn’t happen.
Last night, Coinbase’s first quarter earnings report sent already depressed stocks plummeting, pushing the former public market’s stock below $100 a share. That’s well, far below the all-time high of $368.90 the stock hit last year.
Today, Coinbase shares opened at just $54.66, down 25% from yesterday’s close.
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This morning – as UST burns and other crypto assets, such as the newly launched ApeCoin, are under extreme selling pressure – we’ll examine Coinbase’s results and see what went wrong with its business in the first quarter.
Crypto bulls will dismiss any criticism of the company’s performance as a hiccup in crypto’s greater progression. For the rest of us, the report provides a useful lens to examine the current state of the consumer crypto market. Let’s go!
Fewer users + more costs = big losses
In the first quarter, Coinbase revenue fell 27% to $1.17 billion from a year earlier, and operating expenses more than doubled to $1.72 billion. The huge increase in spending was partly due to the company’s much larger headcount — it had 4,948 full-time employees in the first quarter, up from 3,730 at the end of 2021 and 1,717 at the end of the first quarter last year.
Coinbase, which also reported less revenue than in the fourth quarter, appears to be facing some major problems.