Coinbase (COIN), is a walking bankruptcy absent an immediate, dramatic recovery in Retail customer sentiment.

• The probability of an imminent resurgence in Retail enthusiasm for Crypto is close to zero given 2022’s various Crypto failures including the recent FTX fraud (FTX founder Sam Bankrun Fraud needs to be arrested ASAP).
• It hardly bodes well for Coinbase that “Interest Income” was the company’s second largest Revenue source during the September quarter as the company’s largest Revenue source – “Retail” – was down 66% year-over-year and accounted for 59% of Total Revenue in the quarter (down from 78% a year ago). Given the fallout from the recent FTX fraud it would only be logical that COIN’s Retail revenue continues to deteriorate during the December quarter and likely at an accelerating rate.
• As someone once said: “You can’t cut your way to prosperity”. COIN needs to maintain a certain level of Technology spend to keep digital currency safe during its lifecycle on the platform. It becomes increasingly difficult to do so as Revenue spirals downward. Our view is that no matter how deeply COIN cuts OpEx (see tables below including our comments), there is no cure for what is ailing COIN’s revenues. Email us if you would like the Excel tables below: jmaietta@tek2day.com.

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