Coinbase Global Inc reported a larger-than-expected quarterly loss on Tuesday as investors worried by this year's rout in risky assets shied away from trading in cryptocurrencies, sending its shares down 6 per cent.
Trading volumes at the cryptocurrency exchange more than halved to $217 billion in the second quarter, with retail participation sinking 68 per cent and institutional trading falling 46 per cent. Investors have dumped speculative assets from stocks to crypto this year on fears that aggressive central bank policy tightening could tip the US economy into a recession.
Job cuts
That has sent crypto bellwether bitcoin 50 per cent lower in 2022 and forced several companies including Coinbase — which earns the bulk of its revenue from trading fees — to cut jobs. The crypto exchange it expects trading volumes in the third quarter to be even below that of the reported period.
"Coinbase will likely need to continue to cut costs if they want to avoid missing their target and maintain credibility on their ability to limit cash burn," said Michael Miller, equity analyst at Morningstar Research.
The company has said it aims to contain adjusted core loss to nearly $500 million for the year. In the April-June quarter, it posted an adjusted loss of $4.76 a share, compared with the $2.65 expected by analysts, according to Refinitiv IBES data. Revenue fell 63 per cent to $808 million, missing market expectations.