Jim Chanos Is Right About Coinbase
It wasn't too long ago that cryptocurrency-exchange Coinbase (NASDAQ: COIN) was printing profits. The company booked a net profit of $3.6 billion on $7.4 billion of revenue in 2021 as the frenzy around cryptocurrencies led to nearly $1.7 trillion of trading volume on Coinbase's platform. No one cared about excessive fees because they thought Bitcoin, Ethereum, and other cryptocurrencies were going to the moon.
The cryptocurrency market has since crashed and burned. Bitcoin has plunged from its highs, and a series of scandals, blowups, and bankruptcies has rocked the crypto world. Interest has cooled dramatically.
This creates a significant problem for Coinbase. In 2021, the company converted just around 1.2% of the trading volume from retail investors on its platform into transaction revenue. Not only has transaction volume been decimated, but it's also becoming much harder to justify paying that kind of fee when quick profits are no longer the norm.
Source Fool.com
