Coinbase to Slow Hiring Spree as Users Drop Off

Coinbase Global Inc.,

COIN 11.99%

The largest cryptocurrency company based in the United States, will reduce its hiring rate amid the crypto market crash.

The announcement was made privately to employees and later in a statement by President and CEO Emilie Choi posted on the company blog.

By 2022, the company had planned to triple the number of employees, Ms. Choi said, but that goal was shelved. “Given the current market conditions, we feel it is prudent to slow hiring and reassess our head count needs against our highest priority business goals,” she wrote.

The statement did not provide further details on the action. The company hired 1,200 people in the first quarter, according to its latest earnings report. It has 3,730 employees at the end of 2021. Leading to 2022, Coinbase COIN 11.99%

Ms. Choi said there were plans to triple the workforce.

Chief communications officer Elliott Suthers said the company has no plans to slow the pace of its product development in a statement to The Wall Street Journal. The company will focus on integrating new employees with existing teams, he said, focusing on existing plans and especially expanding internationally.

Last week, amid a severe sell-off in the crypto market, Coinbase surprised investors by announcing a first-quarter loss of $430 million, or $1.98 a year. share. It reported that the number of active users fell during the quarter, a headwind as the company gets almost all of its revenue from transaction fees. The company also said it expected user numbers to decline in the second quarter.

Shares are down about 74% this year and about 82% from their November record of $357.

News of Tuesday’s hiring drop actually bolstered the stock. Coinbase shares were up about 12.4% in midday trading.

Coinbase’s announcement is the latest example of how the price drop is affecting companies in the sector, a pattern that was also evident during this past “crypto winter.”

The cryptocurrency market is largely dependent on momentum trading and speculative enthusiasm. That enthusiasm has been in short supply this year across markets. As the Federal Reserve raised interest rates, investors moved away from the riskiest assets.

Coinbase, which just marked its 10th anniversary in 2012, is one of the most prominent crypto companies and the first major player in the industry to go public, which they did last year. .

Initially, the company was very profitable. For the first three quarters as a public company, it posted an aggregate profit of $2.8 billion. That has helped the company build a current cash surplus of about $6 billion.

However, this year has been a different story. The crypto market has suffered a severe drop amid a growing sell-off in the capital markets. That sell-off ruined a lot of the trading activity that companies like Coinbase rely on for revenue.

The price of bitcoin, the first and largest cryptocurrency, is down 56 percent from its November record, according to research firm Visual Capitalist, despite its historical volatility, the asset has only had four larger sell-offs than that. .

Coinbase is certainly not alone in its struggles. Countless companies across the economy are cutting staff as interest rates rise, the stock market falls and economic concerns grow.

Shares of other publicly traded crypto companies have plummeted this year. Silvergate Capital Corp.

50% off this year, Marathon Digital Holdings Inc.

dropped 67% and TeraWulf Inc.

lost 77%. MicroStrategy Inc.,

a software company that became a major bitcoin holder, down 61%.

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