Coinbase Reports Over $1 Billion in Losses During Q2, COIN Shares Up 7%

  • The earnings report released by Coinbase reflects about $808.3 million in revenue for Q2. 
  • Meanwhile, the company’s expectations were estimated at $832.2 million. 
  • Thereby reflecting a massive underperformance when compared to its expected returns.

One of the world’s largest cryptocurrency exchanges Coinbase Global Inc. (NASDAQ: COIN) has recorded its biggest loss since its IPO. The cryptocurrency exchange giant shared a report disclosing losses of over $1 billion during the second quarter of 2022. COIN shares closed August 10 trading at $94.14, up 7.37 percent from the day’s opening price.

After debuting in the market at around $420, COIN shares dropped as much as $41. However, the market has since stabilized and the company’s shares have gained over 77 percent in the past month, according to data provided by MarketWatch.

It appears that Coinbase is already having its share of the persisting market troubles as the company’s latest earnings report has dashed the expectations of analysts. 

Coinbase Financial Highlights In 22Q2

The report suggests a massive decline in trading activities from its users may have caused the heavy loss as it unveils a 29 percent slump in its Q2 trading volume.

The earnings report released by Coinbase reflects about $808.3 million in revenue for Q2. Meanwhile, the company’s expectations were estimated at $832.2 million. Thereby reflecting a massive underperformance when compared to its expected returns.

According to the report, this marks the second consecutive quarter with massive losses for Coinbase. Also, it marks the company’s worst loss since its NASDAQ listing.

Furthermore, the report revealed that the total number of users trading with the cryptocurrency exchange giant during the period is around 9 million. This shows a decline of up to 200,000 over the previous quarter.

It is believed that the heavy loss in Coinbase’s earnings may be attributed to the massive downturn in the rate of its trading volume. Coinbase noted that it generates its income via these trading services. The exchange makes its money on fees paid by users when making trades on Bitcoin and other cryptocurrencies

Nonetheless, the reported slump in the company’s trading volume may not be traced to a loss in traders as Q2 saw Coinbase losing just 2 percent of its user base despite the distressing market crash.

Side Notes 

Reports suggest that investors are seeking to hedge their bets on cryptocurrencies that they have already invested in rather than managing the risk of trading their assets in a tumbling market situation. Therefore, this passive stance deployed by HODLers could have led to a decline in its trading volume.

Prior to the release of the Q2 earnings report, the United States Securities and Exchange Commission had started probing the crypto exchange giant Coinbase about whether some of the listings could be classified as securities or not. The SEC’s probing may also have lowered the interest of users on the platform, thereby contributing to the decline in its trading volume.

According to a report on Tuesday, Ark Investment Management, one of Coinbase’s major investors, announced that it sold a major stake in COIN shares

Following the incident, Cathie Wood, the Chief Executive Officer of Ark revealed that the SEC’s probing against Coinbase was the main reason behind the sell-off. 

Rebecca Davidson Verified

Rebecca is a Senior Staff Writer at BitcoinWisdom, working hard to bring you the latest breaking news in the cryptocurrency market. In the words of Elon Musk “Buy stock in several companies that make products & services that *you* believe in. Only sell if you think their products & services are trending worse. Don’t panic when the market does. This will serve you well in the long-term.”

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