Here's Why Gemini Space Station Stock Crashed This Week
Key Points
Falling crypto prices are hurting Gemini's revenues and custodial fees.
Gemini is restructuring, exiting some markets, and focusing on prediction markets.
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Shares in cryptocurrency exchange and custodian bank Gemini Space Station (NASDAQ: GEMI) declined by19.7% in the week to Friday morning. The decline comes as the company is embarking on a fundamental restructuring of its business. Here's the lowdown.
Lower cryptocurrency prices
The following chart tells part of the story. The collapse in cryptocurrency prices (Bitcoin and Ethereum are the two most important supported cryptocurrencies for Gemini) has coincided with a decline in Gemini's stock price. While it's easy to show a price chart that looks like the coastline of Scotland, the reality is that Gemini's exchange transaction revenues are likely to suffer when cryptocurrencies fall.
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In addition, lower cryptocurrency prices reduce the dollar value of assets it has in custody, which will put pressure on its custodial fees.
GEMI data by YCharts
Gemini Space Station's big changes
In addition, amid falling cryptocurrency prices, investors have to digest the recent announcement that the company intends to lay off staff globally and exit operations in the U.K., the European Union, and Australia, which has shifted the focus to the US. The intent being to reduce costs and nring the company nearer to profitability.
In addition, the company's high-profile management team, Tyler and Cameron Winklevoss, will focus on expanding its prediction markets business as well as the cryptocurrency exchange business in the US.
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Lee Samaha has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin, Ethereum, and Solana. The Motley Fool has a disclosure policy.
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