Some key takeaways from reading the
$COIN earnings report. I believe
$COIN has had one significant positive development and two negative developments from the last earnings call. Disclosure: I remain short Coinbase.
On the positive side, Coinbase cash burn was not nearly as bad as I expected. They posted a loss of $1.1bn, but that included lots of non-cash expenses. While the non-cash expenses are “real”, it does not affect their liquidity.
Their balance sheet shows a decline in cash from $6.1bn to $5.7bn. They have done a better job in rolling in expenses than I thought they would and they lowered their guidance for expenses for the year.
On the negative side, the biggest red flag is them admitting that the “Crypto Winter” is a Coinbase problem and not a Crypto problem. Crypto industry transaction volume declined 3%, but Coinbase’s declined 30% showing a major loss in market share!
Exchange data shows daily average volume this quarter is down ~30%. This is after two straight quarters of a 30% decline. Revenue should decline even more (as the take rate continues to decline) and more costs need to be cut.