Coinbase to Cut 14% of Staff, Citing Volatile Markets and AI

0:00 There is a change of heart, obviously.

0:02 When they reported earnings in February, indicted for the first quarter,

0:05 they were guided for the expenses to be roughly flat,

0:07 which kind of raised the eyebrows a little bit because

0:10 the activity levels were trending down and there were some concern.

0:16 But going back to December when they

0:18 announced the build out of everything in exchange,

0:20 that a lot of investments that they had been making.

0:23 So they basically wanted to maintain those investments going forward.

0:28 But clearly, three months later, we do get some change of heart here so

0:33 that we're talking about 14% of Coinbase's workforce being cut.

0:38 I guess that amounts to about 700 jobs.

0:42 Is I behind this cut?

0:44 So that's what I would think.

0:47 That is probably part of the equation,

0:50 but not necessarily the driver they did in Brian Armstrong's post on the X,

0:55 they did mention the volatility has been the biggest issue.

0:58 So even we've seen the bitcoin price dropping from 125000

1:03 to 65000 and it's probably what, the 81,000 today.

1:07 So it's coming back in the second quarter, but there is a lot of uncertainty.

1:10 So they trying to adjust to that.

1:12 Mainly.

1:13 They're also as part of the transition, they cut it now to management's level.

1:17 So they try to optimize the business and maybe I is

1:20 the helper there where the managers

1:22 can actually be individual contributors as well.

1:25 So, you know, I think a lot of people know

1:29 Coinbase as simply a platform to buy and sell cryptocurrencies.

1:34 So is is this stock primarily entirely partially driven by the price of Bitcoin?

1:40 If you look at the stock chart,

1:43 part of that reaction is kind of similar to what the Bitcoin is doing.

1:48 But if you look at the businesses

1:50 that are in the subscription and services businesses,

1:52 the stake in the payments and all of those other things that they're building,

1:57 there's really a lot of other things happening across the entire ecosystem,

2:01 including the tokenization and getting even

2:04 into more traditional markets like equities.

2:07 And certainly Coinbase is not alone, right?

2:10 I mean, you've got a number of companies

2:12 in this space announcing job cuts recently.

2:14 BLOCK Gemini Space Station comes to mind, I think.

2:17 CRYPTO.COM What are the reasons why that these companies

2:21 are offering for why they are tightening their belts?

2:26 I think so.

2:27 I don't think it's necessarily a long term problem.

2:32 I think it's more of a cyclical problem.

2:34 And because the cycles are sort short in those businesses,

2:37 the technology developed so fast,

2:39 they really have to adapt and adjust almost on an annual

2:44 basis or every few years when things change very dramatically.

2:47 So they do have to refresh their workforce.

2:49 So, Paul, what's the what's the next step for Coinbase here?

2:54 What's kind of the bull case for this stock here?

2:58 I think the bull case is the ecosystem in on the blockchain and tokenization,

3:04 the base layer program that they're building that can

3:08 allow their users to build on the blockchain,

3:11 the tokenization of different kinds of assets.

3:15 So we just having a lot of things in terms of payments,

3:18 market structure and things like that shifting

3:21 very dramatically on to usage of blockchain.

3:24 So I think that's where the opportunities for that.