Coinbase reported a 27% drop in revenue in the first quarter due to declining platform usage.
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Coinbase has become the latest technology company to warn of slowness in hiring.
The crypto exchange told employees on Tuesday that it would slow down hiring and revaluate its headcount, reversing earlier plans to triple its workforce by 2022.
“Given the current market conditions, we consider it prudent to slow down hiring and reassess our headcount requirements against our highest priority business goals,” said Emily Choi, Coinbase’s chief operating officer, in a blog post.
“Headcount growth is a key input into our financial model, and it is an important step in ensuring that we conduct our business in the circumstances we have planned.”
Once high-flying technology stocks are in recession, companies are re-evaluating their plans to convince investors that they can cope with the storm. The Nasdaq Composite has lost nearly a quarter of its value since the beginning of the year amid concerns over rising inflation and aggressive interest rate hikes from the Federal Reserve.
Between the price slides of Bitcoin and other digital currencies, Coinbase has been particularly hit, with shares plunging 74% year-over-year. Bitcoin fell briefly below $ 26,000 on Thursday, the lowest level since December 2020 after the fall of Terra, a controversial stablecoin project.
Coinbase shares were up about 7% on Tuesday.
Coinbase, which earns most of its trading fees, saw its revenue fall 27% in the first quarter due to declining platform usage. In a call with analysts, Coinbase management said the company was investing “quite a bit more” in compliance but hinted at a slower recruitment as one of the “levers” that it could use to cut costs.
“We know this is a confusing time and the market downturn can be scary,” Choi said Tuesday. “But … we plan for all market conditions, and now we’re starting to practice some of those plans.”
He added: “We are in a strong position – we have a strong balance sheet and we have been through several market downturns before and we are getting stronger every time.”
The move makes Coinbase the latest technology company committed to reducing investment in hiring. Meta, the parent company of Uber and Facebook, has taken a similar step, while Robinhood has reduced its headcount by about 9%.