Coinbase Reports Over $1 Billion Loss in the Second Quarter, COIN Stock Slides Over 10%

On Tuesday, August 9, crypto exchange Coinbase reported its second quarter earnings with a net reported loss of more than $1 billion. The company reported a loss of Loss of $4.98 per share against the market expectations of loss of $2.65 per share.


During the second quarter as the broader crypto market plummeted, investors made a mass exit which led to a revenue decline of 64% for Coinbase. At the same time, coinable’s retail transaction revenue dropped by 66% all the way to $616 million. Bitcoin accounted for 31% of the transaction revenue while Ethereum accounted for 22% of the transaction revenue.


In comparison to $1.59 billion in net incomes during Q2 2021, Coinbase reported a net loss of $1.1 billion during the second quarter this year. Also, the total crypto assets held by Coin in the quarter ending June stood at $428 million. This was more than 50% down than $1 billion in assets during Q1 2022.


In its letter to shareholders, Coinbase noted: Q2 was a test of durability for crypto companies and a complex quarter overall. Dramatic market movements shifted user behavior and trading volume, which impacted transaction revenue, but also highlighted the strength of our risk management program”.


Furthermore, Coinbase notes that the macroeconomic factors have been having significant impact on its performance last quarter. As a result, Coinbase has been forced to resize its business.


At the same time, there have been massive institutional outflows from Coinbase during the second-quarter. While we did see net outflows in Q2, we observed that the majority of this behavior was institutional clients de-risking and selling crypto for fiat as opposed to withdrawing their crypto to another platform,” noted Coinbase.


On the other hand, Coinbase has been cutting down expenses at multiple fronts. Coinbase has decided to freeze any further hiring and might also layoff 18% of its staff in foreseeable future. The company will reduce its marketing spend with paid media and incentives. The company has also reduced its forecast for technology, development and general and administrative expenses.


Coinbase CEO Brian Armstrong said that controlling macro economic factors is not in their control. However, he adds that "We can focus on staying on the forefront of crypto technology to make sure that we’re creating compelling use cases and making those available to our customers. We can focus on our expense management in down markets, and, frankly, we can ensure that we just don’t get distracted or disillusioned by short-term thinking”.


Soon after the news on Tuesday, the Coinbase (NASDAQ: COIN) stock plummeted by more than 10%. The COIN stock dropped by more than 75% during the second quarter.