Coinbase stock is sinking in pre-market trading after the crypto exchange posted worse than hoped Q2 2022 numbers yesterday. As of the time of this writing, Coinbase stock (ticker: COIN) is down 7.5% to $81.10 per share. That loss follows a 10.55% drop in the stock yesterday due to its Q2 earnings. Here’s what you need to know:
- What happened? Coinbase revealed its Q2 2022 earnings yesterday and the stock plummeted. The stock is down a further 7.5% this morning in pre-market trading.
- How was Coinbase’s Q2? It was pretty disappointing. The company reported net revenue of $803 million. That’s down from a net revenue of $2 billion year-over-year and a net revenue of $1.1 billion the previous quarter. Worse: The company suffered a net income loss of $1.1 billion for the quarter.
- Just how bad is Coinbase’s Q2 net income loss? Pretty bad. To put Coinbase’s Q2 2022 net income loss into perspective, a year earlier Coinbase had a net income gain of $1.6 billion. That’s a swing of $2.7 billion in the wrong direction. True, in Q1 2022, Coinbase also had a net income loss, too, but that was a loss of $430 million–relatively small by comparison to $1.1 billion.
- Why was Coinbase’s quarter so bad? While there is not any single factor, a major contributing factor to Coinbase’s Q2 2022 numbers was the death spiral the crypto market as a whole has been in since the beginning of 2022. Crypto prices are well below their all-time highs and their depressed prices are causing retail investors to invest less in the digital assets. Fewer crypto investments mean fewer transactions at crypto exchanges like Coinbase.
- What does Coinbase say about all this? In a letter to shareholders, the company said, “At Coinbase, we live by the mantra ‘It’s never as good as it seems, and it’s never as bad as it seems.’ Despite crypto market capitalization declining $1.3 trillion or ~60% in Q2, primarily driven by macroeconomic conditions and shocks to the crypto credit environment, we remain as bullish as ever on the future of this technology. Coinbase is an all-weather company with experience in navigating through crypto asset price cycles. We continue to take a long-term view and remain focused on building for the future.”