earlier this weekTechCrunch’s Equity podcast pointed to the chaotic price movements of crypto assets and predicted that Coinbase’s earnings later this week could smooth or further complicate the path ahead for startups in the web3 ecosystem. If Coinbase were to report strong numbers, it could quell some concerns about another crypto winter, the logic goes.
That didn’t happen.
Last night, Coinbase’s Q1 earnings report sent its already depressed shares into a tailspin, causing the former public market shares to fall further below the $100 per share mark. That’s way, way below the all-time high of $368.90 that 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 face extreme selling pressure, we will examine Coinbase’s results and what went wrong with its business in Q1.
Crypto bulls will dismiss any criticism of the company’s performance as a blip in crypto’s larger progression. For the rest of us, the report is a useful lens to assess the current state of the consumer crypto market. 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 big increase in spending was due in part 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 of last year.
Coinbase, which also reported less revenue than it did in Q4, appears to be beset by some major issues.