American crypto exchange giant Coinbase released its Q4 2022 statements, showing a net loss of $557 million, signalling a quarter-on-quarter consecutive loss to the tune of $2.6 billion.
In Q1 2022, the Brian Armstrong-led company recorded a $340 million loss which it blamed on lower transaction volume and investment commitments.
In Q2 2022, Coinbase recorded the year’s biggest quarterly losses of $1.1 billion. It fired over 1000 staff representing close to one-fifth of the company workforce, to cut back on costs.
Q3 2022 saw a shrinking user base and rapid loss in the company’s share price value as it posted $545 million in quarterly net losses. Brian, however, expressed optimism that the company will pull through the mire of regulatory landmines that has clawed back on the industry’s effort at progress.
Coinbase Balance Sheet Analysis
In the last quarter, Coinbase’s balance sheet appears to have surpassed Wall Street expectations, raking in $48 million more revenue than the total $581.2 million predicted.
Its earnings per share slightly surpassed predictions by $2 to close at $2.46, and it could keep EBITDA forecasts well within the range of $124 million—impressively $77 million lower than was expected. Close to 50% of its Q4 revenue had come from subscribers as it sought to find non-trading revenue routes. Coinbase hopes to improve its EBITA performance in 2023.
Post-FTX Assessment
On the heel of the November FTX bust, Coinbase declared a loss because of exposure. Brian Armstrong had constantly criticised the ousted FTX CEO, Sam Bankman-Fried’s careless methods, which plunged the crypto space into chaos. The 30-year-old ex-billionaire on the cusp of multiple decades of jail time had once attributed the fall of FTX, resulting in an $8 billion loss, to an accounting error.
“In the wake of FTX and other crypto company failures, we have seen increased regulatory scrutiny,” Armstrong had said, adding that Coinbase will ride through the storm to become a significant beneficiary.
Part of that scrutiny currently marshalled out by the Securities and Exchange Commission (SEC) involves the regulation of stablecoins and their new designation as security. SEC Chairman Gary Gensler’s recent clampdown on BUSD has sent wary shivers down crypto corridors, especially for Coinbase, which had only recently diversified its business into the stablecoin sector with the USDC. The company says it is prepared to challenge the SEC in court over the decision.
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