Coinbase (COIN) price drops after the operator of the publicly traded cryptocurrency exchange reported losses of more than $1 billion in the second quarter of the year.
In its recent letter to shareholders, Coinbase reported that between April and June 2022 the company incurred a net loss of $1.1 billion, including $446 million in total non-cash impairment charges related to its crypto and business investments.
In the absence of this non-cash impairment charge, the net loss would have been $647 million. in Q2 [the second quarter]Adjusted EBITDA [earnings before interest, taxes, depreciation, and amortization] It was minus 151 million dollars.
Coinbase reported $377 million in crypto-related non-cash impairment charges as digital asset prices fell in the second quarter. The company owns crypto assets, 40% of which are Bitcoin (BTC). Amid the recession, the fair market value of the company’s investment in crypto has fallen from about $1 billion in March to $428 million on June 30.
“Under GAAP, we are required to record impairment charges on crypto assets that we hold when the price falls below our cost basis. We account for them in other operating expenses. If there are no such non-cash impairment charges, our total expense Operational in the second quarter will be 1.5 billion USD.
Coinbase’s net income for the second quarter fell to $802.6 million from $1.16 billion in the first quarter. Its transaction revenue was down 35%, with the number of monthly transacting users dropping from 92 million in the first quarter to 9 million in the second. The company says institutional merchandising and retail revenue declined 17% and 36%, respectively, during the period.
Coinbase’s stock price declined after the release of the report, falling from a high of $103.55 on August 8 to a low of $85.60 on August 9 before recovering on August 10, when it closed at $94.14.
Despite its losses, Coinbase remains bullish about its long-term prospects.
“We have always argued that the best way to evaluate Coinbase during these early years of this nascent industry, is through the same lens we evaluate cryptocurrencies – over the course of a price cycle… We believe that if we continue to focus on building the right products and services, we will emerge stronger than before.
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Main image: Shutterstock / Yurchanka Siarhei