Coinbase Stock Fell as the Company Cut More Jobs To Deal With the Crypto Downturn

Coinbase Stock

Coinbase Stock (NASDAQ:COIN)

Due to the volatile nature of the cryptocurrency market, cryptocurrency exchange Coinbase (NASDAQ:COIN) has announced that it will be laying off around 950 employees, representing approximately 25% of its total workforce.

Coinbase (NASDAQ:COIN) has seen its financial performance take a hit due to the prolonged bear market in cryptocurrencies that began more than a year ago and has been exacerbated by the closure of other businesses, such as cryptocurrency exchange FTX. Pre-market trading for Coinbase stock shows a 1.5% decline in stock price.

The -$500M range for 2022 adjusted EBITDA that the firm forecasted on November 3 remains unchanged. Its full-year 2022 forecast anticipates reporting average annual and monthly transacting users, average transaction income per user, and subscription and services revenue.

When the dust settles, and laws become apparent, Coinbase (NASDAQ:COIN) CEO Brian Armstrong believes he will take a better position in his company to capitalize on the cryptocurrency boom.

In a blog post, he said that “it will take time for these improvements to come to fruition” and that “we need to make sure that we have the proper operational efficiency to weather downturns in the crypto market and grab opportunities that may develop.”

Coinbase will lay off employees and cancel numerous initiatives with “a reduced likelihood of success,” he added.

The business estimates that the restructuring costs incurred due to these activities will be between $58 million and $68 million in cash. Stock-based compensation costs associated with the early vesting of existing equity awards are expected to account for about $91 million to $95 million of the total expenses. Most of the costs will likely appear on the books in the first quarter of 2023.

Some Q1 operational expenditures, such as sales and marketing, technology and research, and general and administrative costs, would be reduced by around 25% due to the restructuring plan, it was announced.

As Jefferies began covering the cryptocurrency sector on Monday, investors bought Coinbase stock in the hopes that the cryptocurrency exchange would be able to withstand the consequences of the FTX hack.

Featured Image: Unsplash © unarchive

Please See Disclaimer

About the author: I'm a financial journalist with more than 1.5 years of experience. I have worked for different financial companies and covered stocks listed on ASX, NYSE, NASDAQ, etc. I have a degree in marketing from Bahria University Islamabad Campus (BUIC), Pakistan.