Coinbase Global Sunk by 30.7% in May, Data Reveals

Source: finance.yahoo.com

Coinbase Global shares sunk by 30.7% in May. This is according to data obtained from S&P Global Market Intelligence.

The cryptocurrency exchange platform’s shares have lost a value of 69% year to date.

Coinbase had reported a loss in revenue in the first quarter of its fiscal 2022 (1Q2022). The Coinbase revenue fell by 35.2% year over year to $1.16 billion and the cryptocurrency company made a loss of $554.4 million, reversing 2021’s operating income of $987.7 million. In the prior year, Coinbase made a net loss of $429.7 million versus a net income of $301.9 million.

The free cash flow for the cryptocurrency exchange also changed from an inflow of $3.4 billion in 1Q2021 to an outflow of $840.4 million in 1Q2022.

The growth of Coinbase is now uncertain as investors have been scared by last month’s collapse of Terra’s stablecoin with the price of its sister cryptocurrency, Luna, plunging to almost zero.

Source: coinlive.me

The Terra cryptocurrency was meant to be pegged to the U.S dollar and to maintain a value of $1 at any given time. Early last month, the cryptocurrency lost its peg to the U.S dollar and the price of Luna, the cryptocurrency backing Terra, dropped to almost 0. Developers tried to save the coin by resetting the network but their efforts were futile. Most cryptocurrency investors with investments in Terra and Luna lost massive amounts of money, causing most traders to lose confidence in the cryptocurrency industry.

Coinbase had warned cryptocurrency investors of volatility in their financials as the cryptocurrency asset is prone to price swings. Due to this, the quarterly financials may fluctuate hugely depending on cryptocurrency adoption levels.

Advent events such as the collapse of Terra/Luna left a wave of fear cascading through the cryptocurrency industry, leading to lower trading volumes due to losses.

Coinbase has also reported a drop in the number of Monthly Transacting Users (MTUs) from 11.4 million to 9.2 million, which is still a more than 50% year-over-year rise from the 6.1 million of 1Q2021. Cryptocurrency trading volumes have dropped by 43.5% quarter over quarter and 7.8% year over year, a clear indication that traders are now holding back.

As part of cutting down costs during the crypto crash, Coinbase has announced plans to slow down hiring. It will also revoke “a number of accepted offers” to prospects who are yet to start.

Despite the challenges ravaging the cryptocurrency industry, Coinbase has continued to boost its capabilities. It has added support for 40 more assets for custody and 27 for trading. It has also launched Coinbase Pay to help cryptocurrency wallets connect with fiat currencies.

Coinbase has also partnered with Visa to facilitate payments to Visa debit cards in an effort to reach new global markets.

Coinbase has also become the first cryptocurrency company to enter the Fortune 500 list of big U.S companies.

Source: bitcoinist.com

Although Coinbase has been struggling financially during the crypto crash, the San Francisco-based cryptocurrency exchange recorded a great success in 2021 which propelled it to position 437 in the Fortune list of the biggest U.S companies.

Comments (No)

Leave a Reply

Join the DeFi Coin Chat on Telegram Now!

X