Coinbase Global (NASDAQ:COIN) stock is down 6% today after the cryptocurrency exchange announced that it is extending its hiring freeze amid the current downturn in digital asset prices.
Coinbase said that it is extending its current hiring freeze into the “foreseeable future” and plans to pull some accepted job offers two weeks after announcing that it would slow hiring this year. That news is sending COIN stock lower today. Year-to-date, the share price of Coinbase has fallen 70% to now trade at $73.82 a share.
Coinbase said it is informing prospective job candidates of the rescinded job offers by email. The company also announced that it was extending its severance policy to cover those individuals and will help them with job placement.
“After assessing our business priorities, current headcount, and open roles, we have decided to pause hiring for as long as this macro environment requires,” L.J. Brock, Coinbase’s chief people officer, wrote on the company’s blog.
Coinbase has struggled this year as prices for cryptocurrencies have crashed along with the broader stock market. Bitcoin (BTC-USD), the largest cryptocurrency, is currently trading around $30,000, down 55% from its all-time high of $68,000 reached in November last year. Crypto prices have fallen across the board in recent months.
Why It Matters
Before the current downturn, Coinbase had been a leader in the cryptocurrency market, tripling the size of its staff in 2021 to 3,730 employees. According to CNBC, following its Nasdaq debut in April 2021, Coinbase reported a 12-fold increase in second-quarter sales to $2.28 billion, while profit climbed 4,900% to $1.6 billion.
But Coinbase said last month that revenue in its latest quarter fell 27% from a year earlier. And the exchange’s total trading volume declined from $547 billion in the fourth quarter to $309 billion in the first three months of 2022.
Coinbase is not alone in its hiring retrenchment. On the same day that the crypto exchange announced that it is extending its hiring freeze, Gemini, another cryptocurrency exchange and custodian that is run by twin brothers Tyler and Cameron Winklevoss, announced that it is laying off 10% of its workforce, or about 100 employees, saying that a “crypto winter” has arrived for the industry.
What’s Next for COIN Stock
COIN stock falls today on news that it is having to cut costs as the cryptocurrency sector remains in turmoil. How long cryptocurrency prices continue to fall and the ultimate toll on the industry is unknown at this time. But clearly things are not going well for Coinbase and other companies that have hitched their wagons to digital coins and tokens.
On the date of publication, Joel Baglole 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.