Coinbase stock collapse might not be over as crypto winter is coming

• COIN stock dropped 27% on Tuesday, including after-hours trading.
• Coinbase reported Q1 revenue of $1.17 billion, below $1.48 billion consensus.
• Bitcoin dropped below $30,000 on Tuesday, as crypto sell-off continues through Terra stablecoin collapse.

Coinbase (COIN), the largest US crypto exchange, fell more than 15% in after-hours trading on Tuesday after swinging to an earnings loss and a miss on revenue expectations. This followed a 12.6% loss during Tuesday's regular session, meaning that the biggest publically-traded crypto stock was down over 27% in just 24 hours.

Read more stock market research

Even without the after-hours plunge, COIN stock has lost 71% of its value in 2022. COIN is down 18.1% in Wednesday's premarket trade at $59.77.

Coinbase Stock News: A no good, very bad quarter

The market quickly zeroed in on revenue, which is less manipulable than other figures. Coinbase reported $1.17 billion in revenue for the first quarter, which missed the consensus $1.48 billion top-line by 21%. Equally astonishing was COIN's normalized earnings per share (EPS) loss of $-1.26. Analysts had expected positive earnings per share of $0.91. The US exchange reported EPS of $3.80 in Q1 2021.

Besides the top and bottom lines, Coinbase appeared to be shedding users and moving in the wrong direction overall. Management reported 9.2 million monthly active users compared to forecasts of 9.5 million, and the trading volume for the quarter arrived at $309 billion compared with estimates of $336 billion. Coinbase saw 11.4 million monthly transacting users in Q4 2021, the preceding quarter.

"I think it's worth just addressing the elephant in the room, which is that, of course, the broader markets are down," said Coinbase CEO and co-founder Brian Armstrong. "We're seeing a down market for growth tech stocks and risk assets. And of course, Coinbase and crypto is no exception to that."

Crypto assets in sum fell by almost $800 billion over the past month to a total market valuation of $1.4 trillion, according to CoinMarketCap.com. This is largely due to two related setbacks. First, Bitcoin price has dropped to its lowest price since last summer, bottoming at $29,961 on Tuesday. Then, the algorithmic stablecoin Terra, which is supposed to be pegged at $1, has fallen to 40 cents, which is destabilizing the whole of crypto land, with rival exchange Binance having halted trading on LUNA and UST.

The most pressing issue for COIN stock shareholders, however, is that management did not seek to calm the troubled waters. Instead, they said they expected to see monthly transacting users falling further in the second quarter. This signifies that executives focused on the crypto market day in and day out view this summer as a crypto winter, which should spell more poor results for Coinbase going forward.

Coinbase Stock Forecast: Look out below

COIN stock dropped 15.7% to $61.55 after hours on Tuesday. The once-celebrated crypto stock has been in a never-ending plunge since going public 13 months ago.

As it stands, COIN share price is well below all significant moving averages and continues moving into all-time low territory.

The good news, if you are looking for good news, is that the 261.8% Fibonacci retracement level is now in-sight. It sits at $58.43 on the daily chart below. This level should provide some support.

There is no need to bother with the 361.8% Fibo since that figure is so low that it would signify Coinbase toying with bankruptcy. Coinbase has $6.1 billion in cash on its balance sheet, which is more than enough to weather any crypto winter that eventually gives way to spring.

COIN 1-day chart

---