Crypto Winter Continues as Coinbase Prepares to Lay Off 20% of Staff
The start of the crypto market dive in June previously prompted the exchange to let go of 1,100 employees.
Digital currency markets are still facing the difficulties of crypto winter. Coinbase announced Tuesday that the exchange plans to dismiss 950 employees. The new layoffs follow June cutbacks that reduced Coinbase staff by 1,100 people.
The New York Times reports:
Brian Armstrong, Coinbase's chief executive, said in [a] memo that "in hindsight, we could have cut further" in the layoffs announced last year. He also implied that the collapse of FTX, which generated turmoil throughout the crypto industry, was having an impact on Coinbase.
Armstrong wrote that the "crypto market trended downwards along with the broader macroeconomy" in 2022, then said, "We also saw the fallout from unscrupulous actors in the industry, and there could still be further contagion."
The Times noted that tech giants Amazon, Meta, and Salesforce have also been compelled to reduce their ranks. Many say they were too aggressive with hiring at the height of the Coronavirus pandemic.
Coindesk reports that analysts believe the layoffs may have a positive side:
Coinbase's stock surged almost 9% to $41.62 on the job cut news as multiple Wall Street banks reiterated their positive long-term outlook on the company.
Investment giant Oppenheimer held onto its outperform rating and wrote in a report on Monday that Coinbase has the potential to be "one of the few long-term survivors" in the crypto space, citing "many positives" that have yet to be priced into the stock including diversification, market share gains and a strong balance sheet, as well as short-squeeze potential.