Coinbase Global Inc.,
the largest crypto company, based in the US, will slow down hiring amid the collapse of crypto markets.
The announcement was made privately by employees, and later in a statement by President and Chief Operating Officer Emily Choi, published in the company’s blog.
In 2022, the company planned to triple the number of its employees, Ms. Choi said, but that goal was postponed. “Given the current market situation, we consider it reasonable to slow down hiring and overestimate our needs in terms of the number of people compared to our priority business goals,” she wrote.
The statement does not provide more details about the action. The company hired 1,200 people in the first quarter, according to its latest earnings report. At the end of 2021, it had 3,730 employees. Until 2022, Coinbase COIN 13.45%
planned to triple its workforce, Ms. Choi said.
The company has no plans to slow the product, said communications director Elliott Suthers in a statement to The Wall Street Journal. The company will focus on integrating new employees with existing teams, with a focus on its existing plans and especially on international expansion, he said.
Last week, amid a tough sell-off in crypto markets, Coinbase surprised investors by announcing a first-quarter loss of $ 430 million, or $ 1.98 a share. It reports that the number of active users declined in the quarter, which is a big headwind as the company receives almost all of its revenue from transaction fees. The company also said it expects a decline in the number of users in the second quarter.
This year, stocks have fallen about 72% and about 80% from a November record of $ 357.
Tuesday’s news of the hiring slowdown actually reinforced the action. Shares of Coinbase rose about 13%, closing at $ 70.
The Coinbase announcement is the latest example of how the collapse in prices is affecting companies in the sector, which was also evident in the last “crypto winter”.
Crypto-markets are heavily dependent on trading momentum and speculative passion. This enthusiasm has been in short supply this year in all markets. As the Federal Reserve raised interest rates, investors moved away from the riskiest assets.
Coinbase, which just celebrated its 10th anniversary in 2012, is one of the most well-known crypto companies and the first major company in the industry to go public, which it did last year.
Initially, the business was very profitable. In its first three quarters as an open company, it generated total revenue of $ 2.8 billion. This helped the company create its current cash surplus of about $ 6 billion.
However, this year was a different story. Crypto markets have fallen sharply amid wider sell-offs in capital markets. This sale has halted much of the trading activity that companies like Coinbase are counting on to generate revenue.
The value of bitcoin, the first and largest cryptocurrency, fell 63% from November records. Despite the historical instability of the asset, according to research firm Visual Capitalist, the sales of the asset were greater than that.
Coinbase is certainly not alone in its struggle. Many companies across the economy are cutting staff as interest rates rise, stock markets fall and economic problems grow.
Shares of other public crypto companies have fallen sharply this year. Silvergate Capital Corp.
Marathon Digital Holdings fell 46% year-over-year Inc.
fell 66% while TeraWulf Inc.
lost 78%. Microstrategy Inc.,
the software company, which has become a major holder of bitcoins, fell 59%.
Write to Paul Winnie at Paul.Vigna@wsj.com
Copyright © 2022 Dow Jones & Company, Inc. All rights reserved. 87990cbe856818d5eddac44c7b1cdeb8