- Cryptocurrencies are plummeting, but stocks have also plummeted and startups are scaling back their growth plans.
- It’s a tough time for businesses of all kinds, and CEOs and CFOs are sounding a warning: things can get worse.
Bitcoin is in free fall, but Coinbase stock price is doing even worse.
While the star cryptocurrency has lost 20% of its value in the last week, the value of shares in the main digital asset market has almost halved.
“I think the elephant in the room is worth addressing, which is, of course, that the markets in general are down ,” Coinbase CEO Brian Armstrong has told investors. “We’re seeing a bear market for growth tech stocks and risk assets.”
In its forecasts, the company has stated that it expects a “prolonged and stressful scenario” for the rest of the year.
It’s the same tone of caution that has been expressed by many corporate executives in their earnings releases and conference calls in recent weeks, as inflation, rising rates, the war in Ukraine and a slowing economy in China have turned into a bleak economic breeding ground .
“In times of uncertainty, investors seek safety,” Uber CEO Dara Khosrowshahi wrote in a message to employees a week after Uber reported a $5.9 billion first-quarter loss.
But right now the market seems to offer few secure sites.
Whereas before investors could switch between stocks, bonds or currencies to protect their money, all 3 types of assets seem to be falling at the same time.
Under these conditions, Khosrowshahi says his company will treat hiring as a “privilege” and cut spending on “less efficient” marketing and incentives.
“The average Uber employee is barely over 30 years old, which means they have spent their career in an unprecedented and long bull run,” Khosrowshahi said. “The next period will be different, and it will require a different strategy.”
Netflix has seen its share price plummet and, in its latest earnings call, reported losing subscribers for the first time in more than a decade and projected another two million cancellations in the coming months.
“The huge boost that the pandemic gave to streaming has obscured the picture until recently,” the letter to the company’s shareholders said.
Disney has managed to outperform its streaming rival in the last quarter , but has also anticipated that the unexpected increase in the first half of the fiscal year will probably reduce the estimated growth for the second half. Disney shares have plummeted on the news.
Others, such as fitness company Peloton and electric vehicle company Canoo, have warned of their precarious cash situation, described respectively as “under-capitalized” and raising “substantial doubts about the company’s ability to continue operating.”
Meanwhile, thousands of jobs are being cut at successful companies like Carvana, Better and Robinhood, which face rising labor costs and slowing sales.
Meta CFO David Wehner has said Facebook’s parent company will have to “make some tough decisions” about the projects in a document sent to staff . Wehner added that this meant lowering hiring targets and reviewing staffing assignments for the second half of the year.
Whichever way you look at it, the year 2022 is shaping up to be a complicated year.