Analyst Note
| Michael Miller |On June 14, no-moat Coinbase announced a roughly 18% reduction in its workforce, which will bring employee count down to around 5,000 by the end of the second quarter. The firm previously froze its hiring plans for 2022. Both moves come in the face of an increasingly bearish cryptocurrency market, which has been deeply affected by the high-profile failures of some decentralized finance platforms as well as broader macroeconomic pressures. Coinbase receives the majority of its revenue from retail trading fees, which have shown a strong correlation to the ebb and flow of cryptocurrency prices, leaving the firm exposed to market conditions and the intense volatility that follows. This complicates Coinbase’s hiring and spending needs as the firm's revenue and customer base vary dramatically from quarter to quarter. This most recent move from the company reflects that difficulty.