Coinbase drops to record lows as crypto meltdown extends
Shares fell 31% Wednesday; bonds in line with junk notes
• Coinbase reported lower-than-expected revenue on Tuesday
Coinbase Global Inc (NASDAQ: COIN) shares and bonds tumbled to new lows on Wednesday, signaling investor skepticism about the prospects of both digital assets and the crypto exchange in a bear market.
Shares plunged more than 31% to $50.15 in New York. The crypto exchange is down nearly 85% from its first-day closing price of $328.28 when it went public last April.
The company’s bonds also plunged, trading in line with some of the highest-risk junk-rated notes.
Coinbase is “unlikely to return to recent levels of profitability in the near term absent a significant increase in crypto prices or volatility,” Goldman Sachs analyst Will Nance wrote in a note.
“We believe COIN’s stock will struggle to outperform in the near term.”
The company reported lower-than-expected revenues on Tuesday and said that the crypto exchange platform expects lower trading volume and monthly transacting users in the second quarter than in the first.
A new risk disclosure in its SEC filing triggered concerns among some investors and customers about the safety of their cryptocurrencies held in custody by Coinbase in the event of a bankruptcy.
Brian Armstrong, the chief executive officer of Coinbase, took to Twitter to clarify that there is “no risk of bankruptcy” and the funds are safe while apologizing for not communicating proactively about the disclosure.
Bitcoin fell below $30,000 and touched its lowest level since June, while the TerraUSD stablecoin continued downward.
Coinbase Chief Financial Officer Alesia Haas, on Tuesday, during a conference call with analysts, said that the company sees “bear-market conditions” but can still afford to make 2022 “an investment year.”
Picture Credit: Fortune
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