Investors weren't fooling themselves into expecting an upbeat end to 2022 for Coinbase Global , shares of which have been battered this year amid a cryptocurrency market meltdown. Now the company has confirmed Wall Street's bearish outlook.
Brian Armstrong , the co-founder and CEO of Coinbase (ticker: COIN), said in an interview with Bloomberg this week that revenue at the crypto broker and trading platform was set to plunge this year from 2021's buoyant levels.
Coinbase stock fell 2.7% on Wednesday but was 1% higher in premarket trading Thursday. The shares have fallen more than 83% this year, compared with a decline of 18% in the S&P 500 index.
"Last year in 2021, we did about $7 billion of revenue and about $4 billion of positive EBITDA, and this year with everything coming down, it's looking, you know, about roughly half that or less," Armstrong said in an interview on the "David Rubenstein Show: Peer-to-Peer Conversations," recorded Tuesday. The company later confirmed that 2022 revenue was on track to be less than half of 2021 levels, according to Bloomberg, its first public disclosure of full-year sales outlook as the end of the near draws to a close. Barron's has reached out to Coinbase for additional comment.
Coinbase notched revenue of $7.8 billion last year, largely driven by fees collected from retail investors that poured into crypto amid a historic bull market.
The consensus now among analysts surveyed by FactSet is that the company will post yearly revenue of $3.2 billion by the end of December, driven by a dramatic 65% decline in transaction revenue from retail traders who have headed for the hills amid this year's brutal selloff. Coinbase could slide to a loss this year of $11.70 a share, based on analysts' estimates, down from a per-share profit of $14.50 last year.
It has been a terrible year for crypto traders. Bitcoin and other digital assets have crumbled in 2022, with the total market capitalization of crypto tumbling to less than $850 billion from a November 2021 all-time high near $3 trillion . The price of Bitcoin has dropped some 75% over the same period, with risk-sensitive cryptos falling alongside the stock market amid the Federal Reserve's painful pace of interest-rate hikes to combat high inflation.
Cracks across crypto markets and a string of industry failures have only exacerbated the selloff. The collapse of stablecoin ecosystem Terra, failure of hedge fund Three Arrows Capital , and most recently the shock bankruptcy of exchange FTX have rocked the industry and sent prices relentlessly lower.
Wall Street's outlook for Coinbase may be bearish, but it's even worse for Bitcoin itself, with signs that institutional investors are overwhelmingly betting against a recovery in the price of the largest digital asset.
What about next year? Crypto still faces existential questions, and the latest indication from Coinbase -- in its outlook detailed at the end of the third quarter -- is that there remains a rocky road ahead.
Coinbase said at the end of the third quarter it was "preparing with a conservative bias" for 2023 and "assuming that the current macroeconomic headwinds will persist and possibly intensify."
