Crypto-linked fintech Coinbase, Block tumbles

Wall Street has lowered earnings expectations for once high-flying fintechs Coinbase and Block, as the chill in the market adds more pain to companies already grappling with surging costs and rapidly rising rates.

In the second quarter, Coinbase is expected to report an adjusted loss, while Jack Dorsey-led payments company Block is likely to post a 70% drop in adjusted profit.

More than three quarters of the market capitalization of the coinbase have been lost this year because of its exposure to volatile criptocurrencies.

This is going to be a very difficult 12 to 18 months for Coinbase, said Dan Dolev, senior analyst at Mizuho Securities USA.

Block, which changed its name from Square last year to reflect its focus onBlockchain, has lost half of its market value because of the stock market rout this year.

Multiple companies in the sector were affected by the selloff of cryptocurrencies, with some seeking bankruptcy protection. The largest coin, the virtual currency, has nearly halved its value in the first seven months of the year.

There is a possibility that there is a double digit headcount reduction at Coinbase at some point because the cost is too high, Dolev said.

According to Credit Suisse analysts, estimates and competitive pressures are also contributing to the weakness of the fintech stocks.

The cryptocurrencies sector may have just emerging from a bruising selloff, but they still have to deal with regulatory hurdles in the United States, the biggest market for such assets.

On Tuesday, the online trading app Robinhood Markets Inc reported a 44% plunge in second-quarter earnings, a day earlier than expected, and said it would also cut 23% of its workforce.

Only one of the latest songs can be heard on JioSaavn.com - 14 of 26 brokerages rate the stock buy or higher, 10 hold and two sell their median PT is $91, down from $100 last month. Block Inc - 37 of 50 brokerages rate the stock buy or higher, 11 hold and two sell their median PT is $117, down from $140 last month.