Ratings agency S&P Global has reportedly knocked down the credit rating of Coinbase (COIN) after the crypto exchange revealed its financials for the second quarter of this year.
According to Seeking Alpha, the S&P downgraded Coinbase’s credit rating largely due to its weak performance from April to June 2022.
[adinserter block="1"]In a letter to shareholders last week, Coinbase revealed that it suffered a net loss of $1.1 billion during the period, which includes non-cash impairment charges that the company suffered when the value of its crypto and venture investments dropped.
As Coinbase’s rivals adopt highly competitive pricing schemes, the rating agency warns that the company could see fee compression in its retail channel, which accounts for about 80% of its total revenue in the first half of 2022.
The ratings agency also notes uncertainties in the market stemming from investors who bought crypto assets during the bull run and have yet to recoup their losses.
Despite the weak earnings, Coinbase CEO Brian Armstrong told investors during the company’s earnings call on August 9th that he is still confident about the long-term prospect of the company.
“We’re the responsible company in the space with plenty of cash on the balance sheet, strong fundamentals, if you look over the last 2 years, and we’re winning deals with the largest companies to integrate crypto into their offerings. We’re going to be here through the long-term through the ups and downs of this industry.”
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