Cryptocurrency exchange Coinbase recorded huge losses in the last quarter as the bear market continues to affect businesses in the crypto space.
Coinbase, one of the leading crypto exchanges in the world, reported its second-quarter earnings earlier this week. The exchange’s revenue declined by 61% in the last quarter as the prices of most cryptocurrencies slumped.
The San Francisco-founded company reported an after-tax loss of $1.1bn, compared with the $1.6bn net profit it registered in the middle of the crypto boom last year. The company reported that $446 million of the loss reflected an impairment charge on its crypto and venture investments.
Coinbase’s Chief financial officer Alesia Haas however, commented that the company’s $6.2bn in available capital would enable it to keep investing through the downturn.
Ben Weiss, CEO and Co-founder of CoinFlip, shared his comments with Coinjournal regarding Coinbase’s latest earnings report. CoinFlip is a financial service and crypto platform and is one of the largest Bitcoin ATM operators in the United States.
Weiss said;
“Coinbase’s numbers aren’t surprising given the current economic climate and crypto winter. That being said, Coinbase is responding by imposing financial discipline and refocusing on its core products. Despite volume and revenue declining, Coinbase is still attracting a significant amount of users, which shows its staying power, brand recognition, and likely ability to capitalize when crypto prices recover. The shareholder letter shows management’s confidence in the future of crypto and the company’s commitment to continue building regardless of prices and short-term economic trends.”
Despite the poor performance, Weiss maintains that the decline in Coinbase’s stock is an overreaction, and the cryptocurrency exchange remains a household name in the crypto space. Weiss said;
“The crypto market has seen a lot of volatility, deleveraging, and downward pressure on crypto asset prices. This is obviously going to have a negative impact on the valuation of crypto companies, such as Coinbase. I feel that the market is conflating the performance of crypto assets with the companies in the crypto ecosystem, and therefore the reduction in Coinbase stock price is possibly an overcorrection. Coinbase is a leader in the space with strong brand recognition, and its business model is much more robust than some of the problematic business models we’ve been hearing about – such as centralized crypto lending companies.”
The bear market continues to affect the operations of numerous cryptocurrency businesses, with some of them filing for bankruptcy while others halted withdrawals on their platforms.