In the midst of crypto winter, Coinbase lost $2.6 billion in 2022
2022 will not leave a good memory for Coinbase. Confronted with a bear market which drags on despite a slight rise in bitcoin in recent weeks, the platform has been jostled by competition from world leader Binance and a cascade of scandals, including the one behind the collapse of FTX.
This delicate year is felt in the financial results of the American company, which conceded a net loss of 2.6 billion dollars in 2022, against 3.6 billion in profits in 2021. In the fourth quarter, Coinbase lost 557 million dollars, while he had earned a net profit of 840 million over the same period a year earlier. Net revenue halved year-on-year, from $7.4 billion in 2021 to $3.1 billion last year. Over the last three months of 2022, the contrast is particularly striking with $605 million in net revenue, compared to $2.5 billion in the fourth quarter of 2021.
An activity halved in 2022
To become aware of the drop in activity of the platform, it is enough to take a look at the volume of exchange of cryptocurrencies. This collapsed spectacularly over the course of 2022, falling from 547 billion dollars in the fourth quarter of 2021 to 145 billion during the same financial year 2022. Like turnover, this volume of transactions has halved over the year as a whole, from which it stood at 830 billion dollars, against 1671 billion in 2021. On the other hand, revenues from subscriptions and services increased, from 147.4 million dollars in the second quarter to 282.8 million in the fourth. In this segment, Coinbase is even doing better than in the fourth quarter of 2021 (213.4 billion), but the platform has above all benefited from the sharp rise in interest rates.
These disappointing financial results are not a surprise, given that the company had already laid off 18% of its workforce in June 2022, i.e. around 1,100 jobs, before announcing a further 20% cut a month ago. its teams, forcing 950 additional people to pack. This restructuring, which is expected to cost Coinbase between $149 million and $163 million, will normally be completed in the second quarter. But from the first three months of 2023, the company intends to reduce its operating expenses by around 25% compared to the previous quarter.
The negative signals emitted by the platform were harshly sanctioned on Wall Street. While the firm’s stock was worth $342 when it first listed on Nasdaq in April 2021, it’s now worth just $62. Coinbase hopes to recover some color this year, but the path to regain the highs of 2021 will be noticeably arduous.