According to data provided by SP Global Intelligence, the price of Coinbase Global shares has dropped by 30.7% over the course of the past month. In addition, the cryptocurrency exchange's share price fell by 69 percent year to date. This comes at a time when the vast majority of financial markets have seen sustained downturn.
Coinbase had reported that their earnings have gotten worse during the first quarter of 2022. The company's revenue came in at $1.16 billion, which is a year-over-year increase of 35.2%, yet it still had operating losses of $554.4 million. This caused an opposite effect to the operating income of $987.7 million that was seen in 2021. The company reported a net loss of $429.7 million, which is significantly larger than the previous year's loss of $301.9 million. Additionally, the fresh cash flow saw swings, ranging from inflows of $3.4 billion in the first quarter of 2021 to outflows of $840.4 million in the first quarter of 2022.
The growth of Coinbase is still uncertain as a result of the recent issue involving the Terra stablecoin, which resulted in the sibling cryptocurrency LUNA plummeting closer and closer to zero. To ensure that the value of TerraUSD never deviates from $1 and that it remains pegged to the US dollar: Nevertheless, the peg was broken early in the month before, which resulted in continuous price declines for both LUNA and the stablecoin.
The administrators restarted the platform in an effort to bring the assets back to life, but to no avail. The majority of crypto investors suffered large losses as a result of the collapse of Terra and LUNA, which caused such developments to seriously undermine trust.
What Comes Next?
The company issued a warning to investors about the volatility of its financials because cryptocurrency is a new asset class that is subject to unexpected and significant price movements. As a result, quarterly results may be very unpredictable due to the varying degrees of cryptocurrency adoption. Fear spread quickly among the cryptocurrency world after the Terra incident, which resulted in a decrease in trading volumes as participants in the market calculated their losses.
MTUs (monthly transacting users) on Coinbase decreased from 11.4 million to 9.2 million from the previous quarter, despite a year-over-year increase of more than 50 percent from 6.1 million in the first quarter of 2021. Traders appear to be staying away from the market, as the volume of trades has decreased by 43.5 percent quarter over quarter and 7.8 percent year over year.
Despite this, Coinbase has kept expanding its capabilities despite the wild price swings. The company also introduced Coinbase Pay, which enables the link between fiat currencies and cryptocurrency wallets. Additionally, the company added 27 assets for trading and 40 assets for custody.
In addition, the business partners with Visa to make it possible to make payouts using Visa debit cards, with the aim of expanding internationally. In addition, Coinbase has stopped hiring as it evaluates the current business landscape and formulates strategy for the company's continued and sustainable expansion.