Saturday, May 21, 2022
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Our Dotcom Bubble – The Irrelevant Investor


Add Coinbase to the pile of shares that have been down 80% from their highs going into earnings that falls 15% after the announcement.

The inventory is at $61 within the after hours. It was $130 final Wednesday.

I used to be 15 years outdated when the dot-com bubble burst, so I didn’t get to expertise that via the lens of an investor. It is a first for me, and for a lot of of you. Watching brand-name corporations lose 80 or 90% of their worth is…onerous to place into phrases.

A part of Coinbase’s decline is macro associated, however plenty of it’s straight-up its personal doing.

It seems that buying and selling crypto is much more enjoyable when it’s going up. Retail quantity fell 58% q/o/q.

Wonderful, nothing they will actually do concerning the worth of Bitcoin. However the bills and hiring are uncontrolled.

They added 3,200 staff over the previous twelve months. That’s nearly twice as many staff as that they had final yr. Within the shareholder letter, they wrote:

“We ended Q1 with 4,948 full-time staff, up 33% from final quarter, and are happy with our capability to draw and retain prime expertise.”

One of many ways in which you do that is by paying them with fairness. And boy did they ever. Inventory-based compensation this quarter was $352 million. I’ll allow you to do the mathematics on that. It’s rather a lot.

A 35% SBC improve q/o/q whereas income falls 53% over the identical interval shouldn’t be an amazing look.

Buyers haven’t any tolerance for corporations which can be careless with cash. These days are over.

Josh and I spoke about this and rather more on tonight’s What Are Your Ideas?

 


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