Moody’s Downgrades Coinbase Amid Prolonged Bear Market #Moodys #Downgrades #Coinbase #Prolonged #Bear #Market Welcome to JibGlobe, here is the new resources we have for you today:
Moody’s Downgrades Coinbase Amid Prolonged Bear Market
Moody’s downgraded the exchange’s CFR from Ba2 to Ba3 and its guaranteed senior unsecured notes from Ba1 to Ba2. Additionally, Moody’s said both ratings are still under review and may be subject to further downgrades- unpleasant news for Coinbase Global Inc (NASDAQ: COIN).
The CFR shows a company’s ability and capability to meet its financial obligations. The Ba3 level is considered lower than the non-investment stage. On the other hand, senior unsecured notes are typically unsecured debts. That is debts that a company holds and are not backed by assets. When Coinbase released an overwhelming Q1 result earlier in May, its junk bonds tanked. Since then, the company’s bonds have been steadily declining.
Moody’s Downgrades Coinbase
Moody’s explained the relationship between how Coinbase generates its revenue and transaction activities. The rating agency said the exchange’s revenue model depends on “trading volumes, transaction activity per user and overall crypto asset prices.”
It added that the excessive price fall across all cryptocurrencies had affected the customers’ transaction levels. In turn, Coinbase has to deal with weaker revenues and lower cash flow.
“…Coinbase Is substantially weaker in revenue and cash flow generation due to the steep declines in crypto asset prices that have accrued in recent months and reduced customer trading activity. Moody’s expects the company’s profitability to remain challenged in the current environment despite its 14 June announcement of a reduction in its global workforce of around 1,100 employees.”