Well-known options trader and mathemetician Nassim Nicholas Taleb, who released the influential book The Black Swan: The Impact of the Highly Improbable in 2007, has called Nasdaq-quoted cryptocurrency exchange Coinbase (NASDAQ:COIN) “worthless” in a recent Twitter missive.
While stopping short of drawing analogies to competing exchange FTX, which recently collapsed amid a litany of criminal accusations, Taleb noted that Coinbase is “cash-flow negative with a grisly future (even if crypto comes back),” before bluntly stating that “the company of worthless”.
Taleb’s consternation around all thing crypto stems from his opinion that “blockchain, in spite of all the hype, has not managed to produce anything directly useful to produce cash flow”.
Disclaimer: Headlines are misquoting me on $COIN Coinbase. I said nothing abt their holdings & risks of blowup, no analogy to FTC. My point is that they are cash-flow negative, w/a grisly future (even if crypto come back) & OWNERS have been getting out. The company is worthless.— Nassim Nicholas Taleb (@nntaleb) November 27, 2022
In Coinbase’s defence, the exchange generates revenues regardless of a bear or bull market, though the sorry state of the crypto markets in 2022 has undeniably been a challenge for the company.
Coinbase’s latest quarterly report underscored net losses of US$545mln and a 44% reduction in transaction revenues quarter on quarter, as fee compression and declining commission rates hit hard.
Taleb’s comments echo those of famed short seller Jim Chanos, who in May criticised the “ancillary predatory business model” of the crypto exchanges that are “ripping off retail clients”.
Recent events relating to the FTX collapse have gone a long way in vindicating such comments.
COIN shares have tanked over 80% in 2022, falling from US$250 per share to less than US$45.