Coinbase shares were up more than 3% in premarket trading Tuesday, and no, it's not because the crypto market suddenly turned bullish. The exchange announced it's cutting about 14% of its workforce — roughly 700 people — and refocusing the business around artificial intelligence. Investors, apparently, like the sound of that more than they fear the upcoming earnings report.
In a regulatory filing Tuesday, the company outlined a restructuring plan that it says will streamline expenses and reposition the business for “evolving technological demands.” Translation: Coinbase is betting that AI can do some of the work humans used to do, and it's willing to take the short-term pain for what it hopes will be long-term gain.
The Restructuring
The layoffs will hit about 700 employees globally, with most of the cuts expected to be completed by the end of the second quarter. The company estimates it will cost between $50 million and $60 million in severance and other termination-related charges, most of which will hit the books in Q2. As with any restructuring, actual costs could vary depending on regulatory requirements and other surprises.
Management framed the decision as part of a broader effort to improve efficiency and align with long-term priorities. In other words, Coinbase is trying to get leaner and more tech-forward at a time when the crypto industry is still figuring out its post-boom identity.
The Earnings Picture
Coinbase is set to report first-quarter results after the market close on Thursday, and expectations are not exactly rosy. Analysts are projecting earnings of just 26 cents per share — a steep drop from both the prior year and the previous quarter. Revenue is expected to come in around $1.70 billion, also down significantly year over year.
Prediction market Polymarket gives the company a low probability of beating those estimates. Betting data suggests the crowd thinks Coinbase will miss, which adds a layer of skepticism to an already cautious outlook.
So why is the stock up? Because the restructuring and AI pivot signal that management is willing to make tough calls to protect margins and adapt to a changing landscape. Investors are betting that a leaner, AI-powered Coinbase might be better positioned for the long haul, even if the near-term numbers look ugly.
How Coinbase Stacks Up
According to MarketDash's scorecard, Coinbase presents a mixed picture. The company scores a 46.36 on value — meaning it's trading at a moderate premium to peers. Growth ranks at 67.58, indicating solid potential. Quality is the standout at 76.44, reflecting a healthy balance sheet. But momentum is a weak 14.71, meaning the stock has been underperforming the broader market.
The verdict: Coinbase has strong fundamentals but weak price momentum, suggesting it may struggle to move higher in the near term despite the solid underlying business.
ETF Exposure
Coinbase is a heavyweight in a couple of notable ETFs. The ARK Fintech Innovation ETF (ARKF) has a 6.23% weight in the stock, and the VanEck Digital Transformation ETF (DAPP) allocates 7.88%. That means any significant inflows or outflows from these funds will force automatic buying or selling of Coinbase shares — something to keep an eye on if you're trading the stock.
Price Action
Coinbase shares were up 3.51% at $210.11 in premarket trading Tuesday, according to market data. The move suggests that for now, the market is giving management the benefit of the doubt on the restructuring, even as the earnings clock ticks toward Thursday's close.
