The company blamed the earnings miss on the “crypto winter” that has gripped the sector and led to multiple bankruptcy filings in recent weeks, causing investors to move away from digital coins and tokens. COIN stock was down as much as 13% in premarket trading immediately after its Q2 print, but appears to be recovering as the entire market rises today following better-than-expected inflation numbers for July.
Before today, Coinbase’s stock had been down 65% year-to-date. It now trades just above $90 per share.
What Happened With COIN Stock
Coinbase announced an earnings-per-share loss of $4.98 compared to a loss of $2.65 per share that had been expected by analysts, according to Refinitiv data. Revenue during the quarter totaled $808.3 million compared to $832.2 million that had been forecast on Wall Street.
Transactions among retail investors on Coinbase’s exchange fell 66% during the April through June period as investors steered clear of cryptocurrencies. The price of Bitcoin (BTC-USD), the largest cryptocurrency by market capitalization, is down about 50% this year and trading at $24,000.
Coinbase said its cryptocurrency assets at the end of June totaled $428 million, down from $1 billion at the end of March this year. More than 40% of Coinbase’s assets are held in BTC. The company also reported that it had 9 million monthly transacting users during the second quarter, down from 9.2 million in Q1.
Why It Matters
Coinbase’s Q2 results confirm the impact that the downturn in cryptocurrencies is having on the entire industry. No company seems immune to the selloff that has taken place in recent months, not even a major exchange such as Coinbase. Looking ahead, Coinbase lowered its outlook for the remainder of this year, forecasting 7 million to 9 million monthly transacting users by the end of December, down from a previous forecast of 5 million to 15 million.
The company also announced that it is extending a current hiring freeze and cutting 18% of its workforce as it manages the current market downturn. Coinbase said it will also reduce its marketing spending, and cut spending on technology development and administrative work. “We can focus on our expense management in down markets,” said Coinbase CEO Brian Armstrong in a conference call with analysts.
What’s Next for COIN Stock
COIN stock might actually rise today as the entire stock market gets a boost from a July inflation report showing U.S. consumer price increases are beginning to moderate. However, investors should keep in mind that COIN stock is down 65% on the year and struggling with a reversal in cryptocurrencies that has scared away many people.
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.