Coinbase will cut 14% of its employees and replace them with AI. Is this good for the stock?

US cryptocurrency exchange Coinbase has announced plans to cut about 14% of its staff. CEO Brian Armstrong named as reasons for both the decline in the crypto market and the need to rebuild the company around artificial intelligence. Shares of Coinbase on this background declined by more than 4%.

The cuts at Coinbase were announced on Ma 5 in an open letter to employees by the company's CEO Brian Armstrong. Coinbase employed almost 5,000 people at the end of 2025: accordingly, about 700 people will lose their jobs, Bloomberg notes.

"Two forces are converging at the same point at the same time," Armstrong wrote. The company is having to adapt to a volatile market while simultaneously rethinking the very model of operating in the age of artificial intelligence, he argued. "We need to return to the speed and focus of our startup at our founding, but now with AI at the core," the top executive wrote.

In parallel, Coinbase is moving to a flatter organizational structure: managers will get more authority, and the company will focus on hiring specialists who know how to manage teams of AI agents, the letter notes. As part of the experiment, Coinbase plans to implement "one-person teams": one AI-supported employee will combine the functions of an engineer, designer and product manager.

AI tools are already allowing engineers to significantly reduce time to complete tasks, and many workflows are automated, Armstrong acknowledges. Coinbase has reached a "tipping point," like every company in the industry, he said. "The Coinbase that emerges from this process will be more capable than ever to fulfill our mission," he concluded.

The restructuring costs will range from $50 million to $60 million, according to the company's filing with the regulator.

Coinbase stock quotes on the premarket on Ma. 5 rose by 8%, however, after the opening of trading lost all growth and at the moment cheapened by more than 4%.

Analysts don't share Armstrong's optimism about AI. The real reason for the cuts is "cryptozyme," and talk of AI is just a "convenient excuse," Mizuho Securities analyst Dan Dolev told Bloomberg. Dolev maintains a Neutral rating on Coinbase shares (consistent with a Hold recommendation).

Coinbase's revenue in the fourth quarter of 2025 fell by 20% against the backdrop of lower cryptocurrency prices and reduced trading activity, Bloomberg writes. The company's net loss for the same period amounted to $667 million. For the first quarter of 2026, the company will report on Ma 7.

Bitcoin is now worth about a third less than its peak of $126,000 reached in October 2025: its value has fallen under the pressure of cooling interest in cryptocurrencies and geopolitical instability in the Middle East, according to Bloomberg.

It is noteworthy that Coinbase itself has recently been actively hiring employees: by the end of 2025, the staff grew by 3% - mainly in the areas of product development and customer support. And in February 2026, the head of Coinbase said that he "loves such periods" of recession: "This is a chance to buy bitcoin, a chance to buy back our shares," - quotes Armstrong Bloomberg.

Coinbase isn't the only major company to announce massive layoffs citing AI. Snap, which owns the popular messenger Snapchat, last month announced plans to lay off 16% of its full-time employees, citing AI's ability to eliminate "mundane" work.

US fintech Block also used process automation as a justification for laying off 40% of its employees in February. "Intelligent tools have changed the very notion of building and running a company," Block's CEO, billionaire Jack Dorsey, wrote.

On Tuesday, Ma. 5, PayPal announced restructuring: the company expects to save $1.5 billion over two to three years by cutting costs and staff. It is expected that 20% of the company's employees will be cut.

The majority of analysts covering the cryptocurrency exchange's securities recommend buying them, with 24 of 38 analysts issuing Buy and Overweight ratings, another ten holding a neutral stance with a Hold rating, and four advising the stock to sell (Sell rating), MarketWatch shows. The stock has an average target price of $239, implying a potential upside of 17%.

This article was AI-translated and verified by a human editor