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Goldman Sachs Downgrades Coinbase to Sell Rating — Analyst Says Firm Needs to Make Cost Base Reductions

Goldman Sachs Downgrades Coinbase to Sell Rating — Analyst Says Firm Needs to Make Cost Base ReductionsAnalysts from the multinational investment bank and financial services company Goldman Sachs Group Inc. have downgraded Coinbase Global Inc. in a note to investors on Monday. Today, Coinbase shares are down 83.68% from the stock’s all-time high (ATH) in November 2021. Goldman analyst William Nance explained that his group of market strategists believes “Coinbase will […]

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Moody’s downgrades Coinbase due to bear: Warns it may not be the last

Moody’s said further downgrades could follow if Coinbase doesn’t diversify from its current revenue model or it's unable to turn a profit even in a prolonged bear market.

Credit ratings agency Moody’s has downgraded the Corporate Family Rating (CFR) and guaranteed senior unsecured notes of crypto exchange Coinbase, and stated that both ratings have been placed under review for further downgrade.

The CFR, a rating assigned to reflect Moody’s opinion of a company’s ability to honor its financial obligations, was downgraded from Ba2 to Ba3 which is considered as below non-investment grade.

Senior unsecured notes are a type of debt a company holds that is not backed by any assets and in the event of bankruptcy must be repaid before any others. Moody’s downgraded Coinbase’s from Ba1 to Ba2.

Earlier in May, Cointelegraph reported Coinbase’s junk bonds tanked in response to an underwhelming first quarter and since the report, the bonds have continued to fall a further 9.5%.

In its rationale for the downgrades, Moody’s highlighted Coinbase’s revenue model “is tied to trading volumes, transaction activity per user and overall crypto asset prices.” It said the steep price decline in crypto over the past months has caused customer trading activity to wane, which in turn caused weaker revenue and cash flow to the company.

The uncertain environment forced Coinbase to layoff about 18% of its staff on June 14. But even with this measure, Moody’s said it expects Coinbase’s profitability to “remain challenged in the current environment”.

Competition for customers has also been heating up in the United States after Binance.US began offering zero-fees spot trading for Bitcoin (BTC). The offer follows in the footsteps of trading platform Robinhood which pioneered no-commission crypto-trading in 2018.

In a bid to attract users to the platform, on June 23 Coinbase added five new Ethereum (ETH) ERC-20 tokens plus the ability for users to send and receive some assets on the Polygon (MATIC) network along with USD Coin (USDC) on Solana (SOL).

Related: Coinbase to shut down Coinbase Pro to merge trading services

Moody’s said it could call out for further downgrades should crypto prices continue to fall and if trading volumes on the exchange remain the same or fall further. It will also look at whether the firm can reduce expenses, its ability to maintain talent as well as potential “crypto asset regulatory developments.”

The ratings agency added that Coinbase’s ratings could be upgraded again in the future if it can generate a profit even during a bear market and diversifies its revenue through other streams not associated with trading and cryptocurrency prices, noting that crypto transaction-based revenue represented 87% of Coinbase’s net revenue in Q1 2022. 

Coinbase's shares were up 13.4% to close at $58.88 on Thursday, but fell just over 1% in after hours trading. Year to date, its shares are down nearly 77%.

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Belgian Banking Group KBC Creates Blockchain-Based Coin

Belgian Banking Group KBC Creates Blockchain-Based CoinKBC Group, a major European banking and insurance institution headquartered in Belgium, has launched a token based on a blockchain platform. Its customers will be able to acquire the new proprietary coins and use them through their KBC wallet and mobile app. KBC Issues Digital Coin for Clients and Partners KBC, the Brussels-based financial group […]

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Coinbase Reduces the Size of the Firm’s Workforce by 18%

Coinbase Reduces the Size of the Firm’s Workforce by 18%Amid the crypto market carnage, the digital currency exchange Coinbase revealed it has decided to lay off 18% of its workforce. The announcement follows the company’s original plans to slow the hiring process and the firm rescinding a number of employment offers. Coinbase ‘Grew Too Quickly,’ Crypto Exchange CEO Says On June 14, Coinbase published […]

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Coinbase introduces crypto to Fortune 500 while FTX CEO featured in TIME 100

U.S.-based crypto exchange Coinbase ranked 437th on the elusive Fortune leaderboard, while Sam Bankman-Fried was highlighted by TIME magazine in the innovation category.

In an industry milestone, cryptocurrency exchange Coinbase has become the first corporation within the crypto and blockchain space to be featured on the prominent Fortune 500 list.

A 68-year-old annual tradition, the Fortune 500 list is synonymous with ranking the leading corporations in the United States by total revenue, as well as other quantifiable metrics such as percentage profit margins, assets and the number of employees, among others.

Retail giant Walmart captured the top spot for the tenth consecutive year with $572,754 million in revenue and a growth of 2.4%. Amazon registered second place with $469,822 and 21.7%, while Apple took third with $365,817 and 33.3%.

Coinbase Global’s inclusion at 437th was supported by revenues recorded of $7,839.4 million, a 513.7% annual gain, and 3,730 employees globally.

Related: Coinbase CEO has ‘never been more bullish’ even after $430M Q1 loss

In the other news, FTX CEO Sam Bankman-Fried was featured in The Most Influential People of 2022 by TIME Magazine.

Nominated by TIME correspondent Andrew R. Chow — the author of the recent Vitalik Buterin feature piece — maverick leader Bankman-Fried was noted as an "effective altruist" and recognized for his instrumental role in advancing a positive narrative for the crypto space, and "using every tool imaginable to convince the public of its strengths" according to the 99-year-old magazine.

A recently published report documenting Coinbase’s financial performance across Q1 of 2022 revealed $430 million in losses, the first incident of the company’s public history following four prior quarters of substantial profit.

CEO Brian Armstrong was not fazed by the fortunes though, declaring that these cyclical periods of low market volume provide the opportunity for the company to “focus more intently on product development”.

This optimistic sentiment also applies to Coinbase’s publicly-traded Nasdaq stock COIN, which has plummeted 82% from all-time highs of $368.90 following the initial coin offering bump in April 2021 to $66.10 at the time of writing.

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Turkish Referee Flips Bitcoin at Istanbul Derby Kick-Off, Soccer Authority Launches Probe

Turkish Referee Flips Bitcoin at Istanbul Derby Kick-Off, Soccer Authority Launches ProbeA soccer referee’s decision to toss a bitcoin before the start of a recent match between Istanbul giants Beşiktaş and Fenerbahçe has sparked controversy in Turkey. The country’s football authority is trying to establish why a crypto coin was used for the ritual when that role should have been reserved for the Turkish lira. Bitcoin […]

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Coinbase junk bonds tank amid market rout and creditors’ fears

“Nothing about Coinbase changed this week, we are the same company we were yesterday, or a year ago. If anything, we are in an even stronger position given our balance sheet,” assured Coinbase CEO Brian Armstrong.

The price of Coinbase’s junk bonds are tanking amid an underwhelming performance in Q1 and fears over what could happen in the event of a bankruptcy.

According to bond trading data from Trace Bonds, both of Coinbase’s junk bond offerings have dropped roughly 17% and 5.2% since its Q1 report on May 10 to sit at $63 and $62.31 at the time of writing. Overall they are down 20% and 19% apiece since the start of this month.

Junk bonds are a form of corporate debt issued by firms that do not have investment-grade credit ratings. Firms borrow a certain amount of money via the junk bond offering, and set a maturity date (date of return) and an interest rate that they will pay on top of the borrowed capital.

As junk bonds have a lower credit rating, they command higher interest rates than investment-grade corporate bonds. In Coinbase’s case, it raised roughly $2 billion in September across two evenly spread offerings at 3.375% over seven years and 3.625% over 10 years.

Notably, both junk bond offerings launched at $100 each, and have been steadily trending downwards ever since. The sharper than usual drop this month however suggests that investors are losing confidence in Coinbase moving forward.

The price of Coinbase stock (COIN) has also dropped 20% since the date of its Q1 report, although investor sentiment was already bearish beforehand, with the price dropping a hefty 50% since the start of May.

Bankruptcy proceedings disclosure

The major crypto exchange posted Q1 losses of $430 million alongside a 27% decrease in revenue compared to the first quarter of 2021.

Shortly after the report had been released, concerns were raised over a disclosure in the Q1 report regarding the fate of user’s assets if the firm were to be “subject to bankruptcy proceedings.”

The disclosure noted if the company were to go bankrupt, user’s digital assets held on the platform may “be subject to bankruptcy proceedings” and could see them treated as “unsecured creditors.”

This appeared to cause fears on two ends of the spectrum, as users were concerned that they may not be able to retrieve their assets if Coinbase were to dissolve. But bond hodlers appeared concerned by the idea that user’s could still have some claim on Coinbase’s assets as they expect to be ahead of them in t line.

Coinbase CEO Brian Armstrong attempted to squash fears however, after he noted on Twitter that “we have no risk of bankruptcy, however we included a new risk factor based on an SEC requirement called SAB 121.”

Related: Crypto-associated stocks hammered as COIN and HOOD drop to record lows

Earlier today Armstrong also shared a note concerning the past week of events.

The CEO called for calm despite admitting how “it can be scary to see our stock price down with associated negative headlines,” as he suggested that the firm can handle the current market downturn:

“In times like these we need to step back, and zoom out. Nothing about Coinbase changed this week, we are the same company we were yesterday, or a year ago. If anything, we are in an even stronger position given our balance sheet.”

“This last bull cycle has generated tremendous profit and cash that adds to our resiliency, and we have built an incredible team with some of the best talent in the world,” he added.

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Coinbase CEO has ‘never been more bullish’ even after $430M Q1 loss

“There are so many customers beating a path to our door that we have to have all hands on deck just to keep everything running,” Coinbase CEO Brian Armstrong explained on earnings call.

Cryptocurrency exchange Coinbase has disclosed its first net loss as a public company of $430 million in Q1, but CEO Brian Armstrong said on an earnings call that he's “never been more bullish on where we are as a company.”

In its first quarter 2022 report Coinbase disclosed that revenue had dropped 27% to $1.17 billion, down from $1.6 billion in the first quarter of 2021 and a long way off its Q4 2021 revenue of $2.5 billion. Monthly transacting users also dropped by over 19% to 9.2 million, from last quarter's 11.4 million.

Shares of Coinbase had already fallen by over 16% to close at $73 over the day, and after the earnings disclosure after hours trading saw the price fall further to $61 at the time of writing. Coinbase's shares have been on a steady fall since November 2021 where it almost reached the $380 high from its initial public offering in April last year.

Despite the figures, Armstrong explained why he was still optimistic on an earnings call:

“There are so many customers beating a path to our door that we have to have all hands on deck just to keep everything running, so the down periods are often sometimes kind of a welcome change from that in the sense that we get to focus on building the next layer of innovation that will benefit us in the next cycle.”

Armstrong said that the company was “greedy when others are fearful”, acquiring talent and focusing on projects and infrastructure for the future. Addressing what he called the “elephant in the room” of the company earnings downturn, he said:

“The broader markets are down. We're seeing a downmarket for growth tech stocks and risk assets, Coinbase and crypto is no exception to that. The good news is as a crypto company we've lived through many different cycles in crypto, including major draw downs, which I think make us well suited to operate through these environments.”

He reminded shareholders of a prospectus released by the company a year ago which stated it aimed to grow crypto adoption long term, operating the company at a rough break even.

In its shareholder letter Coinbase mentioned its recent non-fungible token (NFT) market launch as an area it was focusing more on in a bid to become a market leader in the space and its ambition to develop its platform as an “on-ramp to the cryptoeconomy”.

Related: Coinbase CEO responds to insider trading allegations with changes for token listings

Armstrong stated that 54% of the platform's active users are doing something other than crypto trading, but didn’t clarify what activities and made no mention of the new NFT marketplace in his opening statement.

When asked specifically if the company is pleased with the activity in its NFT marketplace, Armstrong said it doesn't share “metrics on any of our new initiatives” adding that “there's a lot to build and the opportunity in the NFT space is enormous.”

The first day of the public opening of the marketplace saw only $75,000 in transaction volume taking place across 150 transactions according to on-chain metrics, a small percentage of the over 8 million email addresses which signed up for the waitlist.

Finishing his opening address Armstrong said the industry was in its early days and Coinbase sees the opportunities ahead adding that “regardless of whether the market is up or down, we're going to keep building.”

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Billionaire Hedge Fund Veteran Anthony Scaramucci Warns Against Short Selling Coinbase Stock (COIN) – Here’s Why

SkyBridge Capital founder Anthony Scaramucci says he disagrees with a fellow hedge fund manager’s skepticism toward America’s largest cryptocurrency marketplace. In a new interview with CNBC Overtime, Scaramucci says that Kynikos Associates founder Jim Chanos is viewing Coinbase as if it were a brokerage stock, rather than a leader within an industry that still has […]

The post Billionaire Hedge Fund Veteran Anthony Scaramucci Warns Against Short Selling Coinbase Stock (COIN) – Here’s Why appeared first on The Daily Hodl.

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Coinbase Shares Declined 50% From All-Time High, Stock Follows Bitcoin’s Ups and Downs

Coinbase Shares Declined 50% From All-Time High, Stock Follows Bitcoin’s Ups and DownsRoughly nine months ago, Coinbase’s initial public offering (IPO) via a direct listing on Nasdaq launched, and shares swapped for $342 per share on April 16, 2021. Since then, Coinbase shares have dropped by close to half that value and today, COIN is swapping for more than 45% lower at $187 per unit. Coinbase Follows […]

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