Investors were not duped into anticipating a nice finish to 2022 for Coinbase Global (COIN) shares, which have been pummeled this year due to a cryptocurrency market crash. The corporation has now fulfilled Wall Street’s pessimistic forecast.
Brian Armstrong, the co-founder, and CEO of Coinbase told Bloomberg this week that revenue at the crypto broker and the trading platform was expected to fall this year from the bullish levels of 2021.
The shares of Coinbase sank 2.7% on Wednesday but were 1.6% higher in premarket trade on Thursday. The stock has dropped more than 83% this year, compared to an 18% drop in the S&P 500 index.
Armstrong said in an interview on Tuesday in “David Rubenstein Show: Peer-to-Peer Conversations” that last year, in 2021, he and his team did approximately $7 billion in sales and about $4 billion in positive EBITDA, and this year, with everything falling down, it’s looking like around half that or less. The business later acknowledged in a tweet that sales in 2022 will be less than half of what it was in 2021.
Coinbase made $7.8 billion in income last year, primarily from fees received from ordinary investors who poured money into cryptocurrency during a record bull market.
Analysts from FactSet predicted the company’s annual revenue would be $3.2 billion by the end of December, driven by a 65 percent slump in transaction revenue. They still estimate that Coinbase could post a loss of $11.70 per share this year, compared with earnings per share of $14.50 last year.
Such a Horrible Year
To be honest, crypto traders have had a horrible year. Bitcoin and other digital assets have crashed in 2022, with the overall market value of crypto falling to less than $850 billion from an all-time high above $3 trillion in November 2021. Over the same time period, the price of Bitcoin has fallen by 75%, with risk-sensitive cryptos falling alongside the stock market due to the Federal Reserve’s painful pace of interest-rate hikes to combat high inflation.
The sell-off also has been worsened by cracks in crypto markets and a succession of industry failures. The collapse of the stablecoin ecosystem Terra, hedge firm Three Arrows Capital, and, most recently, the shocking bankruptcy of exchange FTX all shook the sector and drove prices progressively down, and they seem to be stopping.
Wall Street’s opinion of Coinbase is gloomy, but it’s much worse for Bitcoin: There are signs that institutional investors are betting against the return of the highest digital asset’s price in general.
And what about next year? Even the stocks of Coinbase started to rise in recent days. At the conclusion of the third quarter, Coinbase stated that it was preparing with a conservative attitude for 2023, considering that the current macroeconomic headwinds would stay and perhaps strengthen. And it also spreads to the crypto industry in general, preparing us for the hard road to a brighter future.