Published - January 10, 2023 @ 4:30 PM (EET)
After Coinbase Global Inc. (NASDAQ:COIN) cut its headcount by about 18% last year, the cryptocurrency exchange said it is laying off 950 employees, or 20% of the workforce, in another round of job cuts to reduce costs.
On Tuesday, Co-founder and Chief Executive Brian Armstrong published a blog post saying the crypto industry has been hit by "fallout from unscrupulous actors," warning that "there could still be further contagion."
As part of the layoffs, Coinbase will shut down several projects with a "lower probability of success," he said.
According to the statement, Coinbase expects to book $149 million to $163 million of restructuring charges but still expects 2022 adjusted EBITDA within the negative $500 million range it provided on 3 November.
The layoffs and other cost-cutting measures will reduce the company's operating expenses by 25% for the current quarter, Coinbase said in a security filing.
WHY IT MATTERS
In recent months, crypto markets have suffered a series of meltdowns that hurt their outlook, including the latest collapse of one of the industry's most prominent players, FTX.
"We need to make sure we have the appropriate operational efficiency to weather downturns in the crypto market and capture opportunities that may emerge." - Brian Armstrong
Still, Armstrong kept its positive stance on the industry, noting that Coinbase has made it through multiple bear markets and argued that the industry isn't going away. He said the FTX's downfall would ultimately benefit Coinbase as its strongest competitor now no longer exists.
Following the news, shares of the biggest US digital asset exchange fell 4.5% in US premarket trading, erasing earlier gains.
PRICE ACTION: Based on 21 analysts' ratings covered by TipRanks in the last three months, the stock has a Hold rating (8 Buys, 10 Holds, 3 Sells). The average price target of $60.58 implies an upside potential of 58.3%.
