Published - June 15, 2022 @ 12:34 PM (EET)
On Tuesday, Coinbase Global Inc. (NASDAQ:COIN) added to a further wave of reckoning through the cryptocurrency industry after the company said it would cut almost a fifth of its staff.
The largest US digital-asset platform said it was slashing its workforce by 1,100 employees, or about 18% of its staff, following in the footsteps of other cryptocurrency-related businesses that have recently cut staff over concern of crypto winter.
In recent years, Coinbase had hired aggressively, ballooning to nearly 5,000 in the last quarter after only having 1,250 in headcount at the start of 2021.
Chief Executive Brian Armstrong said Coinbase had grown too quickly, writing in a note to staff,
"We saw the opportunities, but we needed to massively scale our team to be positioned to compete in a broad array of bets. While we tried our best to get this just right, in this case, it is now clear to me that we over-hired."
The news comes following a deep downturn for Coinbase shares. During a crypto market boom last April and investors clamoring for high-growth tech stocks, Coinbase went public via a direct listing at $250 a share.
Over the weekend, Bitcoin prices fell from $30,000 on Friday afternoon to $23,500 on Monday morning, hurting Coinbase shares even further by the abrupt move downward in the crypto markets.
Grimly, over $200 billion were drained out of the cryptocurrency market.
Investors have been dumping risky assets for fear of higher inflation readings, and because Coinbase makes most of its profit on transaction fees, revenue tends to tumble when enthusiasm for cryptocurrency declines.
Yet, JPMorgan analyst Kenneth Worthington still believes that Coinbase is the leading driver and beneficiary of the cryptocurrency economy with solid organic and inorganic growth opportunities.
However, based on the recent weakness in the cryptocurrency markets, the analyst downgraded Coinbase from Buy to Hold and cut the price target from $171 to $68.
Coinbase shares were down 0.8% Tuesday to $51.58 and are off more than 75% so far this year.
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