COIN Drops After $1.1 Billion Net Income Loss

Coinbase shares fall in pre-market trading after the crypto exchange posted worse-than-hoped Q2 2022 numbers yesterday. At the time of writing, Coinbase (ticker: COIN) stock is down 7.5% to $81.10 per share. That loss follows a 10.55% drop in the stock yesterday as a result of earnings in the second quarter. Here’s what you need to know:

What happened? Coinbase announced its second quarter 2022 profit yesterday and the stock plummeted. The stock fell another 7.5% in premarket trading this morning. How was Coinbase’s Q2? It was pretty disappointing. The company reported net sales of $803 million. That’s less than $2 billion in net sales year-over-year and $1.1 billion in net sales in the prior quarter. Worse, the company suffered a $1.1 billion net profit loss for the quarter. How Bad Is Coinbase’s Second Quarter Net Income Loss? Pretty bad. To put Coinbase’s net income loss in the second quarter of 2022 into perspective, Coinbase had a net income gain of $1.6 billion a year earlier. That’s a $2.7 billion swing in the wrong direction. Granted, in the first quarter of 2022, Coinbase also had a net loss of income, but that was a loss of $430 million – relatively small compared to $1.1 billion. Why was Coinbase’s neighborhood so bad? While there is no single factor, a major factor contributing to Coinbase’s Q2 2022 numbers was the death spiral that the crypto market as a whole has been in since the beginning of 2022. Crypto prices are well below their record highs and their low prices are causing retail investors to invest less in the digital assets. Less crypto investments means fewer transactions on crypto exchanges like Coinbase. What does Coinbase say about this? In a letter to shareholders, the company said: “At Coinbase, we live by the mantra ‘It’s never as good as it looks, and it’s never as bad as it seems.’ Despite crypto market cap declining by $1.3 trillion or ~60% in the second quarter, mainly driven by macroeconomic conditions and shocks in the crypto lending environment, we remain as optimistic as ever about the future of this technology. is an all-weather company experienced in navigating crypto asset price cycles, we continue to look long term and stay focused on building for the future.”
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