How Coinbase stock price is reacting to the quarterly results as Bitcoin market cap declines 74% from recent peak

Coinbase stock price slumped by nearly 11 percent to close at $87.68 on Tuesday. The slump in share price came after the cryptocurrency exchange reported a loss of over $1 billion in the second quarter and missed analysts’ estimates for revenue. On Wednesday during the premarket trading, the stock is already down by 7% and is quoting around $81.47.

Coinbase, a $21.76 billion market capitalization company whose fortunes are primarily linked to the crypto market, has its stock down by over 65 percent since January and also over the last 12 months.

Q2 financial results of Coinbase have been announced and the stock market is reacting to the results. The decline in crypto asset prices has significantly impacted the Q2 financial results.

The net revenue was $803 million, down 31% compared to Q1, driven by lower trading volume. The total operating expenses were $1.9 billion, up 8% compared to Q1. Q2 was a tough quarter, with trading volume and transaction revenue each down by 30% and 35% sequentially, respectively. At the end of Q2, we had $6.2 billion in total $USD resources. In addition, we had $428 million of crypto assets.

Overall, the net loss was $1.1 billion and was heavily impacted by non-cash impairment charges. The crypto market capitalization has declined by $1.3 trillion or nearly 60% in Q2. Bitcoin market capitalization has declined 74% from the most recent peak in November 2021 to the lows in June 2022.

A good thing about Coinbase assets is that a recent blockchain industry analysis highlighted that worldwide long-term BTC holders (those holding BTC for more than six months) are holding nearly 77% of the total BTC supply, indicating they are not selling into market volatility. Bitcoin trades at around $23000, a little down over 24-hour price.

Coinbase performance comparing Q2’22 to Q2’20 – In this period Bitcoin prices started to increase just ahead of the most recent bull market:

Verified Users have nearly tripled from 36 million to 103 million

Monthly Transacting Users have grown nearly 6x, from 1.5 million to 9.0 million

Total quarterly Trading Volume increased nearly 8x, from $28 billion to $217 billion

Assets on Platform increased nearly 4x, from $26 billion to $96 billion

We have expanded our product suite and customer engagement with 67% of MTUs now engaging with non-investing products, up from 20% in Q2’20

Subscription & services revenue contributed 18% to total net revenue, up from 4% in Q2’20

More than doubled our institutional customer base to 14,500+ in Q2’22 compared to Q2’20

Increased assets supported for trading and custody by 7x and 6x to 201 and 341, respectively

Coinbase Global made its debut in the stock market in April 2021. The stock under the ticker symbol ‘Coin’ opened for trading at $381 once it got listed on Nasdaq.

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