Wednesday's Headlines: Coinbase Cuts Further Jobs

Wednesday's Headlines: Coinbase Cuts Further Jobs

Here were the biggest movers in the MyWallSt shortlist yesterday:

Moving Up ⬆️

Bumble (BMBL) +7.3%

Lemonade (LMND) +7.2%

Stitch Fix (SFIX) +6.9%

Spotify (SPOT) +6.8%

Redfin (RDFN) +6.6%

Moving Down ⬇️

2U (TWOU) -2.6%

Casey's (CASY) -1.9%

Retail Opportunity Investments Corp (ROIC) -1.9%

Shopify (SHOP) -1.9%

Intuit (INTU) -1.7%

Coinbase Cuts Further Jobs

On Tuesday, Coinbase stated it would cut a further 20% of its staff after already slashing its workforce by a fifth in June. The move will impact 950 employees.

Mirroring sentiments from every company on Wall Street, it would appear Coinbase over-expanded during the pandemic and must now correct this. CEO Brian Armstrong stated:

“With perfect hindsight, looking back, we should have done more. The best you can do is react quickly once information becomes available, and that’s what we’re doing in this case.”

The restructuring will cost the cryptocurrency exchange between $149 million and $163 million for the first quarter. However, in the long term it will cut the company’s operating expenses by 25%. This will ensure Coinbase keeps its EBITDA losses below $500 million, a boundary it set for itself last year.

Cuts are also expected to impact Coinbase’s various moon shots. Armstrong said projects with a “lower probability of success” will likely be axed.

The CEO placed further blame for cuts on the overarching pressures within the crypto sector, highlighting “unscrupulous actors in the industry”, a clear reference to Sam Bankman-Fried and the collapse of FTX. Unfortunately, this also prompted Armstrong to state these may not be the last of cost-cutting measures as the space suffers from increased scrutiny.

Coinbase’s stock jumped more than 12% on the news.

Top Rivian Executives Depart

There are more worrying signs at Rivian today as the company announced that several top executives will be leaving the business.

The news comes as the electric vehicle startup missed production targets amid continued supply chain disruptions. The departures include the head of body engineering and the head of supply chain — some of the company's longest-tenured employees.

Ryan Frank, VP of body and interior engineering joined the company in 2019 from Ford.

Rivian had hoped to manufacture 25,000 vehicles in 2022, but missed that target by about 700.

Rivian came to the public markets in November 2021 in a much-hyped public offering. The company’s shares have since collapsed amid market uncertainty. The company was considered one of the best plays in the electric vehicle industry, with a potentially lucrative long-standing partnership with Amazon.

However, in recent months the company has had to roll back on a number of plans — including a partnership with Mercedes Benz that would have seen them produce electric vans at the Mercedes factory in Poland.

Bed Bath & Beyond Drifts Closer to Bankruptcy

In the latest twist to the Bed Bath & Beyond saga, the beleaguered home store posted its most recent quarterly earnings yesterday. Despite predicting a poor performance last week — prompting a massive sell-off of the company’s stock — it still managed to underperform those revised projections. Many fear that the firm is now even closer to bankruptcy than it warned last week, with losses continuing to widen and no respite on the horizon.

Bed Bath & Beyond posted an adjusted loss per share of $3.65 on revenue of $1.26 billion. These figures come in significantly lower than the analysts' expectations of a $2.23 loss and $1.34 billion in revenue respectively. The company has done its best to cut costs in recent months, with 150 store closures on track to be completed soon and additional layoffs expected in the near future.

According to CEO Sue Gove on the company’s efforts to dramatically cut costs:

“Although we moved quickly and effectively to change the assortment and other merchandising and marketing strategies, inventory was constrained and we did not achieve our goals,”

Despite this significant underperformance, Bed Bath & Beyond actually closed up over 27% yesterday and is trading up a further 30% premarket this morning. Speculation is rife among investors that the firm could be a potential acquisition target considering its current financial woes. Retail stock forums such as those on Reddit — the same pages that sparked BBBY’s many infamous meme-stock rallies in previous years — have been buzzing with activity and are likely a significant factor behind the stock’s unlikely surge.