Coinbase Global Inc.
slid after hours Tuesday as the company reported a loss and said its users declined from the previous quarter.
The stock fell 15% in late trading, after retreating 12% during the regular session. It is off by more than 70% so far this year.
The loss the company reported was worse than analysts had expected.
posted a net loss of $429.7 million, or $1.98 a diluted share, on revenue of $1.17 billion in the first quarter, compared with earnings of $387.7 million, or $3.05 a share, on $1.8 billion in revenue a year earlier.
Analysts had projected a loss of 1 cent a share on revenue of $1.5 billion, according to FactSet.
The majority of the exchange’s revenue comes from transaction fees, which fell substantially in the first three months of the year. The number of monthly transacting users also declined, and Coinbase said in its shareholder letter that it expects both number of users and trading volumes to decline again in the second quarter.
In April 2021, Coinbase became the first major bitcoin-focused company to test the public markets in a blockbuster direct listing. The stock ended its first day trading at $328.28 apiece, giving Coinbase a $85 billion valuation. The company’s market capitalization is now roughly $16 billion.
Investors increasingly perceive financial markets are at a turning point, and as a result, have retreated from some of the most speculative investments. The stock market fell from record highs as the Federal Reserve started to roll back its easy money policies, raising interest rates and unwinding its asset portfolio. The central bank raised interest rates by half of a percentage point last week, the largest hike in over two decades causing a several-day rout.
Prices of cryptocurrencies, high-risk assets, have fallen dramatically. Nonfungible token sales have flatlined. Bitcoin is now worth less than 54% of its November high. This year, Bitcoin was off 33% at Monday’s close while Ethereum was down 38%. Investors pulled billions of dollars from the crypto market before the market leveled off on Tuesday alongside traditional markets.
Other crypto stocks have seen big drops.
Silvergate Capital Corp.
has fallen 42% so far this year,
has slid 64%,
Riot Blockchain Inc.
has slipped 66% and
a bitcoin-mining company, is down 80%.
The sharp decline in cryptocurrencies isn’t entirely unexpected. At the same time, many people in the cryptocurrency industry have contended this time would be different because of the crypto market’s expansion and broader Wall Street adoption. Several bitcoin bulls have praised its value as an inflation hedge. That remains to be seen.
The third-biggest stablecoin, TerraUSD, meant to keep its value at $1, fell as low as 69 cents on Monday, causing a flood of investors to sell their holdings. Treasury Secretary
on Tuesday reiterated calls for Congress to authorize regulation of stablecoins following the fall in the price of TerraUSD.
This year’s rout has punished large-cap tech stocks, too.
Meta Platforms Inc.
are all down at least 35% this year. Meanwhile, the tech-oriented Nasdaq Composite has fallen 25%.
Sentiment on nonfungible tokens, or NFTs, has also cooled down, signaling a widespread unwinding of risky bets.
For now, investors await consumer-price inflation data due out on Wednesday. If the report suggests inflation has peaked, analysts say it could potentially influence the Fed’s aggressive hiking plan.
Write to Corrie Driebusch at firstname.lastname@example.org
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