- Coinbase (COIN) stock is heading lower on layoff news.
- The company announced it is cutting 18% of its workforce.
- This comes as it prepares for poor economic conditions.
Coinbase (NASDAQ:COIN) stock is slipping on Tuesday after the crypto exchange announced a massive number of layoffs for its employees.
The announcement comes directly from Coinbase co-founder and CEO Brian Armstrong in a blog post. In that post, Armstrong reveals that the company is laying off a total of 18% of its workforce.
So why is Coinbase laying off so many employees? These layoffs come as Coinbase prepares to deal with poor economic conditions. That includes warnings that another crypto winter could be on the way. If that holds true, it would mean less transaction revenue for the crypto exchange.
But it’s more than just that. According to Armstrong, Coinbase grew too quickly over the last 18 months. At the start of 2021, it had 1,250 employees. To keep up with the crypto bull market, the company increased its team size by more than 400% over the last 18 months.
The Coinbase CEO says this is causing additional problems at the company. Not only is it increasing costs but also there are headwinds to deal with as new employees make the company less efficient.
To protect the information of its customers, Coinbase has already cut off employees affected by the layoffs from its system. This was done to prevent any rash actions in response to the layoff news.
Employees laid off by Coinbase are getting 14 weeks of severance pay, with an additional two weeks for every year beyond the first they’ve worked for the company. U.S. employees are also getting four months of COBRA health insurance and global employees get four months of mental health support. Also, these former employees will have access to Talent Hub in an effort to help them find new employers.
News of the layoffs has COIN stock down 5% as of Tuesday morning.
There’s more stock market news ready below!
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On the date of publication, William White did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.