The bitcoin crash is hitting Coinbase really, really hard.
The cryptocurrency brokerage reported a first-quarter loss late Tuesday and revenue that fell 27% from a year ago, missing Wall Street’s forecasts. Coinbase shares plummeted nearly 25% in early trading Wednesday morning and hit their lowest level ever.
Coinbase stock is now down more than 75% this year and is trading nearly 85% below its all-time high price from November. Shares have lost more than half their value in just the past week alone.
The plunge in Coinbase’s stock coincides with the massive drop in the value of bitcoin, ethereum and other cryptocurrencies over the past few months. Coinbase said in its earnings report that about 48% of its transaction revenue came from bitcoin and ethereum in the quarter.
Bitcoin prices briefly fell below $30,000 Wednesday morning following the Consumer Price Index report on inflation.
As a result of the volatility, Coinbase reported steep drops in the number of users, trading volume and assets from the fourth quarter.
“The first quarter of 2022 continued a trend of both lower crypto asset prices and volatility that began in late 2021,” Coinbase said in a letter to shareholders. But the company added that Coinbase remains “as excited as ever about the future of crypto.”
Still, investors appeared to be alarmed by new language in Coinbase’s quarterly earnings filing with the Securities and Exchange Commission that warned about bankruptcy risks.
The company said that “in the event of a bankruptcy, the crypto assets we hold in custody on behalf of our customers could be subject to bankruptcy proceedings and such customers could be treated as our general unsecured creditors.”
That would imply that customers would not be able to access funds if Coinbase declared bankruptcy.
But Coinbase CEO Brian Armstrong tried to reassure customers and clear up any confusion about the bankruptcy talk. In a series of tweets late Tuesday night, Armstrong wrote that “your funds are safe at Coinbase, just as they’ve always been” and added that “we have no risk of bankruptcy.”
Armstrong wrote that the company was required to include the bankruptcy warning language because of “a newly required disclosure for public companies that hold crypto assets for third parties” as a result of SEC rules.
Coinbase is arguably the most high-profile cryptocurrency company. It generated a lot of attention earlier this year for a bizarre (but buzzy) Super Bowl ad featuring nothing more than a QR code that moved around the screen for 60 seconds.
Coinbase said in its earnings report that the ad “resulted in significant improvements in our brand awareness, favorability and consideration.”
Coinbase has also been busy adding other cryptocurrencies to its platform, such as cardano. And it also has launched a marketplace for non-fungible tokens (NFTs), digital assets that have become increasingly popular in the art and collectibles world.
None of this has been enough to stop the massive slide in Coinbase’s stock, however.
The company went public last year through a direct listing of its shares on the Nasdaq and was immediately worth nearly $100 billion. Coinbase’s market value is now hovering around $15 billion.