Coinbase shares dip in pre-market following layoff announcement

Quick Take

  • Coinbase was trading around $37 pre-market, down around 3.1%.
  • The exchange announced layoffs affecting 950 staff, or 20% of its workforce. 

Coinbase shares dipped during pre-market trading following the firm's decision to cut 950 staff.

Shares in the crypto exchange fell 3.1% in the early session, trading around $37 by 8 a.m., according to data via Nasdaq. COIN closed above $38 yesterday, up 15%.

Shares dropped just over 4% following the decision to cut 20% of its workforce. After a brief recovery, COIN traded down again.

The announcement won't have come as a surprise to some. Analysts at Cowen anticipated further job reductions in a note last week. 

"We expect COIN to initiate another significant round of headcount reductions in early 2023 (potentially up to 40%) to get the cost structure in line with the reduced trading volumes," wrote Stephen Glagola and George Kuhle in a research note, before going on to say that a risk factor for shares is that "sufficient headcount/cost reductions are not taken in early 2023." 

Coinbase's latest layoffs affected 950 employees and reduced its operating expenses by 25%. The exchange cut 1,100 jobs, or 18% of its workforce, in June 2022 and 60 employees in November 2022 — bringing the total number of cuts to a little over 2,100.

The exchange estimates its plan will cost between $149 million and $163 million in restructuring expenses, according to its 8K filing.

The new expenses consist of $58 to $68 million in cash charges related to employee severance and other termination benefits and between $91 million and $95 million in stock-based compensation expenses.

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