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Coinbase CEO Brian Armstrong. Photo by Bloomberg.

Coinbase Sets Bar Low for Long-Term Profit Goals

Photo: Coinbase CEO Brian Armstrong. Photo by Bloomberg.

When it comes to profit goals, Brian Armstrong isn’t exactly setting the bar high. Coinbase declared today that it was abandoning the goal it laid out two years ago when it went public to operate “at break even, smoothed out over time,” so that losses sustained during crypto winters would be offset by profits made in good times. Instead, Coinbase said in a shareholder letter accompanying fourth-quarter earnings today that it was “setting our sights on positioning the company to generate adjusted Ebitda in all market conditions.”

Talk about qualified ambitions. Leaving aside the “setting our sights on positioning” verbiage, which makes the time frame hazy, the reliance on “adjusted Ebitda” as the metric makes this promise meaningless. Adjusted Ebitda is one of those metrics companies use when they want to pretend to be profitable by excluding all manner of inconvenient expenses. (See our deep dive here.) In the case of Coinbase, it shrank $557 million of net losses in the fourth quarter to $124 million of losses on an “adjusted Ebitda” basis by excluding a laundry list of expenses. These include stock-based compensation (that’s a biggie) and impairments on investments, as well as a $50 million penalty paid to New York regulators over “shortcomings” in its compliance program.

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