“We appear to be entering a recession (which could) lead to another crypto winter, and could last for an extended period,” said Coinbase CEO Brian Armstrong.
Updated at 11:18 am EST
Coinbase Global (COIN) – Get Coinbase Global Inc Report shares slumped lower Tuesday after analysts at JPMorgan slashed their price target on the digital currency trading platform amid a trillion meltdown in global cryptocurrency markets.
Shares were further pressured by news that the group will cull around 18% of its workforce, a level that would eliminate around 1,100 jobs and generate ‘”substantial” reorganization charges.
“We appear to be entering a recession,” which “could lead to another crypto winter, and could last for an extended period,” Coinbase said in a blogpost. “While we tried our best to get this just right, in this case it is now clear to me that we over-hired.”
JPMorgan analyst Kenneth Worthington lowered his rating on Coinbase to ‘neutral’ from ‘overweight’, while hiving his price target by more than $100 to $68 per share, while cautioning investors for “more downside to the shares should cryptocurrency markets not stabilize and should management not announce more definite steps to reducing the cost base.”
“While we continue to be believers in the cryptocurrency markets and blockchain technology, the extreme decline in the price of cryptocurrency markets in the second quarter, combined with Coinbase’s ramp in investment, would appear to not only make it challenging for it to generate a profit in the near future but also to meet its annual loss cap of $500 million in annual EBITDA,” Worthington said.
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Stock Market Today – 6/14: Stocks Bounce From Bear Market Lows; Rate Traders Flip Fed Rate Hike BetsCoinbase shares were marked 3.5% lower in late morning trading Tuesday to change hands at $50.20 each, a move that would extend the stock’s year-to-date decline to around 82%.
Bitcoin prices extended declines Tuesday, briefly falling below the $21,000 level, as investors continue to question the near-term solidity of global cryptocurrency markets.
Moves yesterday by cryptocurrency lending group Celsius Network to freeze withdrawals and transfers on its platform — which houses around $11.8 billion in assets — rippled through markets yesterday, as did a temporary halt on withdrawals from Binance, the world’s biggest crypto exchange.
Investors on Tuesday were closely-tracking bitcoin levels to see if they fall, and hold, below the $21,000 mark, a level that could trigger a margin call on bitcoin backed loans taken by software group MicroStrategy MSTR.
Bitcoin prices were last seen 4.5% lower on the session at $22,180.25, a move that extends its year-to-date decline to around 50%. The coins hit a fresh December 2020 low of $20,816.36 in overnight Asia trading.
Broader crypto markets, which peaked at $2.9 trillion last year, have lost nearly $1 trillion in collective value over the past two months.
