Cryptocurrency trading platform Coinbase Global ( (COIN) - Get Coinbase Global Inc Report) said it is suspending the hiring of employees as it refocuses its priorities amid massive swings in the company's stock price.
The company announced measures on May 16 to reduce its costs.
"We’ve made an important decision to ensure we’re being rigorous in our resource prioritization so we can emerge from this down cycle even stronger than we are today," Emilie Choi, president and chief operating officer, said in a blog post.
"We’re announcing we’re slowing hiring so we can reprioritize our hiring needs against our highest-priority business goals."
The stock has been extremely volatile and fell by 72.59% year-to-date and 52.59% during the past month. Shares of the company rose on Tuesday by 13% at 2:40 ET.
Investors have been frustrated with the performance of the company who reported weaker-than-expected first quarter revenue and warned that the selloff in the digital currency markets are likely to continue.
Coinbase said revenue for the three months ending in March dipped by 35% from last year to $1.17 billion, short of Wall Street's estimates while retail trading volume dipped by 38% to just $74 million. The company also posted a surprise loss of $1.98 per share.
Trading volume fell only by 7% as institutional investors participated. The ongoing collapse in bitcoin prices has turned off some retail traders and resulted in its current quarter activity declining by 30%.
Coinbase's monthly transacting users, or MTUs, also fell by 22% from the prior quarter to 8.9 million, well below first quarter levels, the company said.
Lower Transaction Volumes
Bitcoin, which accounts for around a quarter of Coinbase trading volume, has continued to decline after reaching an all-time high of $69.044.77 on November 10. .
"We expect Q2 to have both lower transaction volumes and lower (Monthly Transacting Users) than the Q1 levels," said CEO Brian Armstrong.
Choi said that the suspension in hiring will not affect the company's expense outlook for the second quarter or full-year 2022. The company had originally planned to triple the number of employees, but current market conditions is causing the company to pull back.
"We feel it’s prudent to slow hiring and reassess our headcount needs against our highest-priority business goals," she wrote.
Employee salary and benefits are a "key input to our financial model, and this is an important action to ensure we manage our business to the scenarios we planned for, specifically the potential adjusted ebitda we are aiming to manage to," Choi wrote.
The company has planned for "all market scenarios, and now we are starting to put some of those plans into practice," she said.
Choi reiterated that the company maintains a "solid balance sheet" and has experience prior market downturns in the past.
When Coinbase cautioned in a disclosure form that investors' crypto assets held on the platform could be seized by administrators if a bankruptcy occured, investors reacted by selling shares of the stock. Shares of Coinbase fell to $53.72 on May 11 from a 52-week high of $368.90.
Armstrong attempted to reassure investors in a May 12 blog post, stating that the company typically does not discuss fluctuations in the price of the stock.
He said part of the problem was the overall downturn in the stock market.
"I don’t know how long this down-cycle will last, or if we are at the bottom," he wrote. "I just know that we will make it through to the other side, and we come out stronger than ever if we focus on what matters: building."