Faced with the threat of a bear market, cryptocurrency companies are laying off waves one after another. Even Coinbase, an American cryptocurrency exchange, said it would lay off 20% of its workforce. It also expects a loss of up to $500 million in 2022. Unexpectedly, the stock price did not fall but rose. It closed up 12% on Tuesday.
According to “Barron’s” (Barron’s) report, although reducing costs is not a panacea, analysts emphasized that cutting expenses through layoffs is a necessary condition for Coinbase to reverse the decline in stock prices. It shows that the company is properly managing the “burn rate”, and investors therefore regard the layoffs as good news.
Coinbase announced Tuesday that it will lay off 950 people, about 20% of its current workforce. As of September 2022, the company has approximately 4,700 employees.
Coinbase stated that it will complete the restructuring plan in the second quarter of this year, including employee severance pay and other dismissal benefits. Coinbase estimates that this will generate approximately US$149 million to US$163 million in “restructuring expenses”, but Coinbase expects that after the completion of the restructuring, The company’s first-quarter operating expenses are expected to decrease by about 25%.
As early as June last year, Coinbase had already experienced a round of layoffs. The exchange laid off 1,100 employees, a layoff rate of 18%, on the grounds of cost control and excessive expansion during the bull market.