Occasionally, an analyst will say the price of a company’s stock will drop to zero. Recently, an analyst made such a comment about Carnival Cruise Lines. Even more notable was a similar comment about Tesla in 2018. In both cases, the comments were triggered by huge losses. Those losses are not terribly different from those just posted by Coinbase Global Inc. (NASDAQ: COIN). Its stock will not go to zero, but it does have much further to fall.
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The stock market’s support for Coinbase has disappeared. Shares are down 65% this year and likely will be hit hard after recent earnings. According to the Financial Times, “Chief financial officer Alesia Haas said that, along with long-term debt taken out when interest rates were lower, Coinbase believed its $6.2bn in available capital would enable it to keep investing through the downturn.” “Believed” is not an encouraging term.

The new quarterly numbers do give reason for despair. The company lost $1.1 billion on revenue of $803 million. Coinbase put cash and cash equivalents at $5.7 billion. Long-term debt sits at $3.4 billion.

The future of Coinbase is what will happen to what it calls the “crypto winter.” Will it last a few months or a few years?

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Coinbase is not the only company in the field to suffer from the effects of this so-called winter. Some firms in the industry have gone out of business. Public companies that are part of the cryptocurrency ecosystem have posted losses and seen their shares crushed.

Coinbase gets more scrutiny than many other public corporations in its business. Its initial public offering was launched with great fanfare. It was the poster child of a future when cryptocurrency would begin to replace other major assets used in the world’s financial transactions. This hopeful future was just decimated.

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