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Coinbase Shares Are Down 80% Since IPO: Can It Recover?

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Coinbase shares plummet after reporting $430 million loss: With its stock down 80% since launch day and crypto prices plummeting, what’s next for investors?

  • Coinbase’s share price has plummeted since its market debut last April
  • It now trades at $72 after suffering a quarterly loss of $430 million
  • With the market in freefall, he reported a drop in the number of transactions

During the pandemic, interest in cryptocurrency has skyrocketed, with prices for popular coins reaching new highs and institutional investors starting to sit up and take notice.

So it seemed logical that one of the largest cryptocurrency exchanges in the world would take advantage of this and go public.

Last April, Coinbase made its market debut to much fanfare. Its shares closed their first day of trading at $328, or 31% above the benchmark price above $250. This represented how far mainstream cryptocurrencies had gone.

Just over a year later, the platform is trading at around $70, a drop of almost 80%. Even for speculators accustomed to hodling, this is a big drop.

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Coinbase is now trading at $84, almost 80% below its market entry price

Its recent results reflect waning interest in cryptocurrencies, with trading volumes dropping more than 40% in the first quarter.

It also posted a quarterly net loss of $430 million, compared to a profit of $840 million in the fourth quarter.

What’s behind the platform’s dismal results?

Coinbase blamed its disappointing results on the “trend of both crypto asset price declines and volatility that began in late 2021.”

He makes his money by taking a small share of the cryptocurrencies traded on his platform.

The market has matured considerably since the platform launched in 2012 and it is now the largest crypto platform in the United States. It benefited from rising crypto prices which led to a surge in transactions.

But now the crypto market is in freefall, with bitcoin’s value having fallen 50% since its peak in November and Ethereum trading at around $2,400.

Neil Wilson, chief market analyst at Markets.com, says Coinbase has always been “incredibly dependent” on bitcoin’s price, which is part of why Coinbase has suffered – the stock has fallen more than 40% over the past few years. last five days.

Crypto expert Glen Goodman adds that the timing of Coinbase’s IPO is partly to blame.

“Coinbase shares debuted on the market at the worst possible time for investors – right at the peak of the crypto mania of 2021. So they have priced in a bright future.

“But as bitcoin’s price suffers from a post-party hangover, trading volumes have dropped significantly as many investors lose interest. That means less revenue for Coinbase and much less profit.

This will likely only be exacerbated by growing concerns about inflation and the higher cost of borrowing as central banks raise interest rates.

The US Federal Reserve raised its rate by half a percentage point, its biggest rate hike in more than 20 years.

Wilson says the Fed’s decisions and the macro outlook “mean the wheels are coming off the broader market.”

Others are more optimistic about Coinbase’s prospects. Cathie Wood’s Ark Investments recently added another $7.2 million to its investment, saying the crash in prices is a buying opportunity.

But if its latest results are conclusive, investors will have to prepare for a period of turbulence.

The exchange posted net income of $1.16 billion, compared to $2.49 billion in the previous quarter, and suffered a loss of $430 million.

As expected, quarterly trading volume increased from $547 billion to $309 billion and assets on the platform fell to $256 billion.

“The first quarter of 2022 continued a trend of both declining crypto asset prices and volatility that began in late 2021. These market conditions had a direct impact on our first quarter results,” said the stock market. “But we entered these market conditions with forethought and preparation, and remain more excited than ever about the future of crypto.”

While it was one of the first exchanges in the space that made it easy to buy and hold crypto, it faces increasing competition from more nimble platforms and lower fees. students.

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