Shares of Coinbase Global plunged after the bell on Tuesday as the company reported lower-than-expected first-quarter results.
The American crypto exchange slumped 15.67% or 11.44 points to $61.55 per share. It trailed a drop of 12.60% or 10.52 points to $72.99 per share in the regular trading session.
This downward movement slashed $2.54 billion from the company’s market capitalization. Since late March, the stock has shed more than 70.00% of its value.
Notably, the broader slide in technology stocks and the importance of cryptocurrencies hit Coinbase hard.
For instance, Bitcoin, the leading virtual coin, briefly dropped below the symbolic price threshold of $30,000.00 on Monday. In line with this, the BTC is down more than 30.00% this year.
Accordingly, Coinbase’s revenue declined 27.00% to $1.17 billion. The result came in lower than the market consensus of $1.48 billion. In addition, the firm recorded a net loss of $430.00 million or $1.98 per share.
Overall, usage on the platform declined from the fourth quarter. Retail monthly transaction users (MTUs) dwindled to 9.20 million, below the forecast of 9.90 million. It is also down from 11.40 million in the fourth quarter.
At the same time, the total trading volume skidded 44.00% to $309.00 billion from $547.00 billion in Q4. Additionally, it missed the average analysts’ expectation of $331.20 billion.
Nevertheless, the company does not appear to be worried about its prospects. It reminded shareholders that its stock is a long-term investment due to the volatile nature of cryptocurrency.
Coinbase anticipated that these market conditions were not permanent. The firm also mentioned that it currently focuses on the next generation of crypto opportunities beyond trading.
Coinbase’s increased spending hit Q1 results
Coinbase’s increased spending in the last quarter also helped to drag down the company’s bottom line.
Subsequently, overall operating expenses came in at $1.72 billion. This inflated cost outstripped revenue for the first time since the company began reporting finances publicly.
Moreover, general and administrative expenses were $414.00 million, representing an increase of 39.00% compared to the prior quarter.
Its operating expenses climbed to 70.00% in six months, suggesting a hyper-growth phase in spending.
Accordingly, Coinbase attributed the rise to higher full-time and contractor-related headcount expenses. The expenditure aims to strengthen and scale the firm’s customer support, legal, compliance, and business support functions.