Getting nickeled-and-dimedThe crypto winter has been slowly but surely eating away at Coinbase’s balance sheet, leaving only crumbs of revenues in its wake.
- Shares in Coinbase dipped 5% in extended trading after already losing 10% in Wednesday’s session following a worse-than-expected earnings report. The brand posted LPS of $4.98 compared to the $2.65 analysts estimated on revenues that dipped a rather dramatic 64% YoY to come in at $803.3m.
- The platform saw a 66% decline in retail transaction revenue to come in at $616.2m as retail investors exited the crypto market while trying to shield their stakes from a months-long downturn in the market, leading Coinbase to report a massive net loss of $1.1bn compared with a net income of $1.59bn the same time last year.
- Coinbase is having to resize its business to adapt to market conditions. Its crypto assets sit at $428m, down from $1bn last quarter, and lost 200k monthly users in the quarter. To adjust, the platform will extend its hiring freeze and will cut 18% of its headcount, it’ll do doing less with paid media and it's reducing its tech and development spend.
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Prices BlackRocket upwardsThe big news out of the cryptoverse today was a new partnership between Coinbase and investment giant BlackRock, who both have a common goal for digital assets.
- The pair wanna broaden institutional access to crypto and they’ve rocked the market with a new partnership to make that happen, now offering services that will help BlackRock’s more than 200 institutional investors directly manage and trade Bitcoin initially, with plans to explore other tokens/assets in the future.
- This is just the kind of reassurance the crypto market needed after watching its value tumble to multi-year lows in the last few months, a downturn that has hit Coinbase and its balance sheet particularly badly. Pairing up with such a reputable financial giant could be seen as a signal to investors that the industry is still on somewhat solid footing.
- COIN surged as much as 43% at one point in Thursday’s trading to hit its highest level since early May before closing up over 10%. The stock has ballooned in the last seven straight trading sessions to see mind boggling gains of 67%, having been given a 20% boost on Wednesday by rumors of better-than-expected earnings on the way.
Marco Verch Professional Photographer / Flickr
Coinbase under security scrutinyJust when Coinbase looked as though it was making a recovery, the SEC comes along and slaps a probe on the platform.
- COIN plummeted 21% on Tuesday after rumors of an SEC investigation swept through the cryptoverse. The undisclosed probe is supposedly investigating the crypto exchange for potentially selling digital assets that should’ve been listed as securities. This closely follows the insider-trading charges made against a former product manager, in which the SEC was involved.
- The SEC identified 9 of the 25 tokens traded were securities in Coinbase’s insider-trading case – an uncharacteristic move by the agency. Now (at least if true), it might’ve been because the rumored probe into Coinbase itself actually predates the investigation into insider-trading.
- Paul Grewal (chief legal guy at Coinbase) may have confirmed the validity of the rumors, taking to Twitter to say that Coinbase “looks forward to engaging with the SEC on the matter”, but reaffirming that it doesn’t list any securities on its platform. If the SEC found it did, however, it would have to register its exchange with them.
“Coinbase does not list securities. End of story.”An ex-Coinbase employee is charged by the DOJ and SEC for insider trading, and the implications could be more far reaching than people thought.
- Coinbase’s former product manager was charged with insider trading. Ishan Wahi faces allegations that he shared intel on digital tokens set to launch on Coinbase with his brother and his friend. The SEC are treating this as the first crypto-related insider trading prosecution, with Damian Williams, a US attorney, stressing the charges were a “further reminder that Web3 is not a law-free zone.”
- Profits of around $1.5m were made, all executed under the guise of Ethereum blockchain wallets. Coinbase CEO Brian Armstrong said on Twitter the exchange knew about the potential front running back in April, to which they launched an investigation immediately. Coinbase itself is not being charged.
- Significantly, the SEC says 9 of the cryptos in question were securities. Sure, they weren’t “massive” names (AMP, RLY, DDX, to list a few), but the admission yet again throws into question what cryptocurrencies should be classified as, and under what jurisdiction should they reside. If you’re wondering why this could be a big deal, check out the explainer we did on the whole thing.
Coinbase quells investors’ fearsRest easy, Coinbase fans – the crypto exchange announces it had no exposure to firms carrying the DeFi contagion.
- Coinbase announced in a blog post on Wednesday that it had no exposure to Three Arrows Capital, Celsius, or Voyager – all of which have now been forced to seek bankruptcy protection. The CEX stressed it has no interest in engaging in “risky lending practices” and that risk management is a “first principle in its product design”, holding customer assets 1:1.
- However, it admitted exposure to Terra, which, ICYMI, saw its $60bn ecosystem implode within the space of a week. Coinbase conceded that its venture program made non-material investments in the project, though it didn’t go into any further details than that.
- COIN gained an impressive 14% on Wednesday, continuing a strong month which has seen the exchange bounce 84% from its June low of just $44.15. The competition it faces remains rife, though: Binance.US came out yesterday and announced, “In light of recent reports that Coinbase is shutting down its affiliate marketing program, Binance.US is launching its own affiliate program.” Ouch.
愚木混株 cdd20 /Unsplash
Pressured for CEX?Despite crypto’s latest meltdown showing signs of cooling off, there’s no relief down at Coinbase.
- Shares in Coinbase dropped a further 10% last week in spite of the total crypto market rising 2% as some positive sentiment edged back into the space. The exchange has seen an estimated $6bn mark down in average trading volume since November, leading to Goldman Sachs cutting the stock from ‘neutral’ to ‘sell’ in late June.
- Outflows saw an increase last week, with a particular spike in stablecoins leaving the exchange. On July 15 alone, around 50% of stablecoins were flushed from Coinbase Pro, totalling $248m. Whether it was a mere anomaly or not is unclear, but rival exchange Binance did not see a similar drop around the same time.
- Coinbase is suspending its affiliate program, according to leaked emails – a scheme in which approved affiliates can earn commission on attracting new clients and users to the world of crypto and Coinbase. Given the tetchy times, this led to some questioning Coinbase’s available liquidity, but the dude who set up the affiliate program said it has “nothing to do with liquidity”.
Coinbase expands its horizonsCoinbase is having to bear with the bear market and growing competition, and it’s hoping a bunch of new features will ease the burden.
- Coinbase shares lifted over 13% on Thursday to make solid moves towards its first week of gains all month. The exchange hit a brand new all-time low last week to close at $52 amid an ongoing bear market – in both crypto and stocks – and is still down nearly 85% from its IPO opening price even after this week’s gains.
- The jump could’ve had something to do with a new product. Coinbase Derivatives Exchange has launched its first listed crypto derivatives product and Nano Bitcoin futures contracts will be available from June 27, with each contract sized at 1/100th of a bitcoin – it’s wanting to cash in on the $3tn in derivatives volume worldwide amid a slump in token prices.
- In the same breath, the company discontinued Coinbase Pro. The professional trading arm of the platform was launched in 2018 to cater to professional crypto traders. They’re trying to simplify the trading process, and Coinbase Pro services will migrate onto its new Advanced Trade section.
The Curious Case of CoinbaseCoinbase goes from wanting to hire to having to fire, announcing this week that it’ll be letting go of a significant portion of its workforce.
- Coinbase will let go 18% of its staff by the end of Q2, totalling around 1.1k job losses. The decision comes as the company works out ways to cut costs amid a duumvirate of a recession and crypto winter on the cards. CEO Brian Armstrong said the company “grew too quickly” off the back of the 2020/21 bull market.
- It went from planning to hire 2k people, to pausing that, to rescinding new job offers, and now it’s letting people go. In fairness tho, Coinbase aren’t the only ones cutting staff – BlockFi will cut 20% of its workforce, while Crypto.com is letting go of around 260 employees. It’s tough out there.
- COIN is down a mega 86% since its IPO in April last year. Despite efforts to get on board the NFT hype with Coinbase NFT, the exchange has still seen declining levels of transactions as people become v risk-averse during a time of macro uncertainty.
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The debasement of COINCoinbase earnings only worsen the stock's recent slide into the red after investors get a glimpse at rapidly declining revenues.
- Shares got absolutely wrecked on Tuesday, down over 20% in extended trading to deepen a bear run that has seen the stock lose 30% this week in the midst of a crypto crash, and over 70% since late March. Earnings were behind the afterhours loss, missing on both ends with LPS of $1.28 on revenues that declined 27% to hit $1.17bn.
- Trading volume was down an eye watering 44%, hurt by (among other things) a broader slide in tech stocks and cryptocurrencies – ICYMI, Bitcoin has been going down to goblin town, sinking to $30k on Monday. Retail monthly transaction users (the day trading crew) fell nearly 20% to 9.2m, and made up only $74m of the company’s $309bn in trading volume.
- Coinbase insists the results are within its own outlook, despite missing analyst expectations, pointing out that it spent more on development and marketing than it made in revenue. Investors will hope those efforts pay off, but considering the Fed is only getting more hawkish and rate hikes aren’t going anywhere, things don’t look great.
Maxim Hopman / Unsplash
Coinbase’s non-fungible tumbleweedCoinbase NFT opens its door to crickets, with transaction volume coming in at a minute fraction of OpenSea’s numbers.
- On its first day open to the public, Coinbase NFT achieved…150 transactions, recorded a measly $75k in total volume on Thursday. Stretching back even into the beta phase, only 1.2k from a reported 8.4m on the waitlist have made a transaction on the platform. Yikes.
- Rival OpenSea recorded over $1bn in transaction volume on the same day. Coinbase will be scratching its head at the super-low traffic, but luring peeps away from the comfort of familiarity on the internet is no easy feat. OpenSea has consolidated a big claim to the NFT marketplace that will take a lot to overturn.
- Shares tanked 12% on Thursday – which, in fairness, had a lot to do with the entire market taking a fall. However, with earnings approaching for Coinbase next week, investors are hoping for a modicum of good news to spring some bullish life back into prices.
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Coinbase NFT can stop counting pennies nowCoinbase NFT finally picks up pace since launching on April 20, racking up a third of its sales on Thursday alone.
- The platform is still in its beta stage, meaning there are only small numbers of merchants selling NFTs, currently around 250. But momentum may have started to build: Thursday recorded $100k worth of sales, taking up a large slice of the marketplace’s meager $300k in sales since launch.
- Its USP over market-leader OpenSea is its social media angle. Coinbase NFT will bring elements of Instagram and dress it up as an NFT platform. Users will have their own profiles to show off their NFTs and receive comments and likes from other crypto-lovers.
- Coinbase really needs this venture to work. Shares fell to their lowest price ever on Thursday, and the stock has plummeted 66% since the high of $368 on November 9, coinciding with Bitcoin and the crypto market’s fall from grace.
Yash Bindra / Unsplash
Coinbase’s NFT InstagramBig-shot crypto exchange Coinbase finally serves fans the beta of its long-anticipated NFT marketplace, with a bit of social media zest to spice things up and compete with OpenSea.
- “Coinbase NFT” came to market on Wednesday, letting a small bunch of excited fans off the three-million long waitlist to test out the platform for the first time. It’s taking a leaf out of Zuck’s book, adding an Instagram-esque feel to the platform and letting users like and comment on images and have their own NFT profile pic.
- Has it missed the hype train? OpenSea NFT sales are down 67% in the last month, and that’s the biggest player in the game currently. Coinbase hopes its social media angle will bring in more casual traders, but there’s a way to go and competition is heavy – OpenSea currently accommodates 95% of ETH-based NFT traders.
- Shares traded down 2.7% despite the rollout after hitting an all-time low of $140 on Monday. Even as NFTs cool-off, investors will be hoping that diversifying its revenue stream through this new venture will bolster some price action leading up to the official launch.
Coinbase cleans the windshieldCoinbase gifts its crypto fans a peak at its upcoming listings as it tries to avoid the pump-and-dump trend.
- Coinbase is trying to maintain transparency on the platform by announcing the 50 cryptos it will add to the platform this year – the idea is that this will counteract the frenzied buying and selling that usually follows a listing.
- Robinhood illustrated that point perfectly when it listed four new tokens this week, and all four went soaring double digits soon after. Eagle-eyed fans aren’t sure Coinbase has solved all its transparency problems though, noticing that a mysterious wallet bought $400k of the exact tokens it planned to list, hours before the announcement…
- Elsewhere, another crypto firm is making waves. Private crypto payments startup MoonPay has now raised over $87m from over 60 investors to increase its horizon in Web3 – and investors include megastars like Justin Bieber, Bruce Willis, Ashton Kutcher and Paris Hilton. Celebs endorsing crypto always goes well, doesn’t it Kim K?
Michael Dziedzic / Unsplash
Watch the pennies...Coinbase has been piling into its NFT strategy, but investment firm Mizuho thinks that’s an expensive plan.
- Coinbase shares sank 7.6% in Tuesday’s trading in its worst day in over a month after Mizuho analyst Dan Dolev handed the stock a downgrade, based on skepticism over the NFT market and the brand's operating expenses.
- Dolev lowered his price target on the stock to $190 (prices closed Tuesday at $177) and said he has doubts about Coinbase spending an estimated $300m on its NFT plans – especially in a year already challenged by declining transaction revenue and external headwinds.
- Interest in the NFT market also seems to be waning, says Dolev, an idea supported by a 50% decline in OpenSea’s transaction volume last month. Lucky for Coinbase, it's not keeping all its eggs in one basket and has a busy roadmap of crypto projects that include expansion into India and Brazil, plus a new crypto wallet offering.
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Coinbase wants to conquer Latin AmericaCoinbase eyes up Latin American domination as a crypto recovery boosts digital asset brands.
🔍 Key points:
- It’s reportedly nearing a deal to buy Latin American firm 2TM as part of its global expansion strategy. 2TM is the brand behind Brazil’s largest crypto exchange, Mercado Bitcoin, which is a $2.2bn unicorn with a trading volume of $7.1bn.
- Coinbase is hoping to cement its leadership position in the region but there are others that have had the same idea – rival Binance is also on the lookout for Brazilian acquisitions, with the country’s crypto market expected to reach over $25.3bn.
- Prices rallied nearly 8% on Monday to close above $200 for the first time since Feb 16. Other digital asset-related brands followed in the footsteps of a general crypto recovery – Marathon Digital, HIVE Blockchain, and Bit Digital all marched up around 8%, and Riot Blockchain lifted 10%.
Rafaela Biazi / Unsplash
To be or not to be a securityThe status of crypto “securities” still hangs in the balance, but that hasn’t stopped Coinbase being hit with a lawsuit for selling unregistered securities.
🔍 Key points:
- Coinbase has been handed a $5m class-action lawsuit by three users who have accused the major exchange of selling 79 “unregistered securities” to its customers without having a license to do so.
- The plaintiffs protest that Coinbase didn’t tell them about the risks of crypto before selling them these tokens (which include Doge, Polkadot, and Solana among others), arguing that the platform should have registered with the SEC as a securities exchange.
- It’s a similar case to the one Ripple Labs is currently fighting with the SEC, for selling its native XRP token. The court case has been going on for months with no real indication of a clear winner just yet, so it's unlikely that this will amount to much until the Ripple case sets a precedent for the industry.
Collision Conf / Flicker
Coinbase casts doubt on Q1Despite delivering an impressive earnings beat, a slowdown in trading volume this quarter fills Coinbase investors with fear.
- The crypto exchange slid 4% in morning trading on Friday despite fourth quarter earnings smashing estimates with EPS of $3.32 on revenues of $2.5bn, when analysts expected EPS of $1.85 and revenues of $1.94bn.
- Monthly transacting users (MTU) hit 11.4m, exceeding estimates and proving that customer engagement with the exchange is on the up and up – this helped trading volume hit a record $547bn in the quarter.
- But, the remainder of 2022 is looking less than upbeat. This year’s crypto crash is expected to leave a serious mark, and the platform warned that subscriptions, services revenue, and transaction revenue will be lower in the current quarter. Coinbase warned: “We enter 2022 with even more unknowns which make our business all the more difficult to forecast”.
Maxim Hopman / Unsplash
Coinbase gives hacker $250k. Gets called cheapCoinbase offers a bounty to the researcher that found a “market-nuking" bug on the platform, but a few are calling the amount too low.
- A white hat hacker found a crisis-level flaw on Coinbase on February 11 (right before its epic Super Bowl ad), reaching out to their followers to try and get in touch with the admin team to plug the bug.
- The platform has given the hacker $250k for responsibly disclosing the fault, as is common and standard procedure with ethical hackers. Twitter was quick to judge (as per usual), pointing out that some Coinbase execs get paid more annually.
- The whole thing has highlighted the importance of white hat hackers, who basically use their tech powers for good instead of evil to help find and then report potential bugs. They’re becoming key to the crypto world, with the White House last year offering up to $10m to those who help identify threats against U.S. infrastructure.
Coinbase fumbles the passCrypto exchanges had a big night out at Super Bowl LVI, but Coinbase’s tech team may have dropped an absolute glory pass from it’s marketing guys.
- Coinbase spent $14m on its Super Bowl advert debut, and it tried something “a bit different” – a QR code bouncing around the screen for 60 seconds (picture that DVD Video logo everyone would eagerly wait to hit the corners) which would take people to its website when scanned.
- Well, that was the plan anyway. Coinbase reported “more traffic than we’ve ever encountered” and it’s platform crashed, so new punters couldn’t open an account. All publicity is good publicity though, and everyone is talking about the unique advert.
- And Coinbase weren’t the only ones making a power play. Crypto exchanges FTX, Crypto.com, and Bitbuy all bought a $7m/30-seconds ad slot for the game that featured a slew of celebs as they all race to become the most popular exchange out there.
Crypto costs Coinbase some cashCrypto is coming downward, and Coinbase is paying the price – literally.
- The stock traded down 13% on Friday for its biggest one-day decline ever, taking prices to their lowest level yet at $192 – down nearly 25% from its $250 IPO price and 60% from its IPO highs.
- “The correlation between COIN and Bitcoin remains very strong”, according to Matt Maley. Bitcoin’s (BTCUSD) value has seen over $600m wiped off recently, and Coinbase often mirrors the token's movements.
- Coinbase is trying to diversify its offerings with things like NFTs, staking, an earn campaign, and DeFi products, to lessen its dependency on retail trading as a revenue stream – but, that means investors have even higher growth expectations for the stock.