- Coinbase announced it will eliminate 950 jobs or about 25% of workforce
- COIN stock dropped 2% in premarket but surged 7.5% on Tuesday open.
- Coinbase stock has settled back between 3 and 4% in the late morning trade.
- Bitcoin recently extended its rally back above $17,000.
Coinbase (COIN) stock is once again surprsing everyone. A day after closing up more than 15% on Bitcoin and crypto market strength, the cryptocurrency currency exchange has gained more than 4% on Tuesday despite announcing largescale jobs cuts. Initially, COIN stock lost more than 2% when the news arrived during the premarket, but the stock jumped 7.5% at the open in a complete turnaround. Though the market opened in the green, all three major indices were down slightly two hours into the session.
Coinbase stock news: CEO Armstrong says 950 jobs to go
Coinbase stock added 4.5% to $40 in the late morning trade despite the announcement that it would be laying off about 20% of its workforce with another 950 job cuts. CEO Brian Armstrong said the layoffs would begin immediately and would be finished by the end of the second quarter.
Brian Armstrong said the cost of the job cuts, including severance, would amount to between $149 million and $163 million. Coinbase had approximately 4,700 employees before the announcement.
"[I]t will take time for these changes to come to fruition, and we need to make sure we have the appropriate operational efficiency to weather downturns in the crypto market and capture opportunities that may emerge," said Brian Armstrong in a statement. Armstrong was referring to the collapse major competitor FTX, which he thinks will lead to a major influx of crypto customers back to Coinbase in subsequent quarters.
Brian Armstrong said the strategy would lead to as much as 25% reductions in certain operating expenses for the first quarter and would entail shutting down projects with less likelihood of success.
On Monday Coinbase stock surged more than 15% higher on the back of Bitcoin's price rally. In the past week BTC has gone from $16, 650 to roughly $17,330. This amounts to just a 4% gain, but it is the first time that Bitcoin has been able to hold onto $17,000 in nearly a month.
Coinbase stock may be able to keep climbing this week if the US CPI print on Thursday shows inflation continuing to decline. That would lead the US Dollar lower and the equity market to expect a sooner end to rising interest rates. Members of the Federal Reserve this week, however, have been clamoring for the US central bank to raise rates as high as 5.5%. Effective December 15, 2022, the fed funds rate was raised to a range between 4.25% and 4.5%.
Coinbase stock forecast
Coinbase stock's recent rally is exciting for investors as shares have lost more than 80% in the past year. Now bulls will look in the near term at the $46 level, which has worked as both support and resistance nearly a dozen time going back to May of 2022. Above there the $62 and $85 resistance levels loom. The 9-day moving average (blue) looks close to overtaking its 21-day counterpart (purple), which would offer more evidence of a sustained rally. The Relative Strength Index (RSI) has also recently moved above the 50 level, typically a bullish sign. On the downside, support remains at $32, which largely held up around New Year's.
COIN daily chart
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