Coinbase Global Inc COIN traded lower by 4.9% on Friday after the stock was hit by a Wall Street analyst downgrade.
The Coinbase Analyst: Bank of America analyst Jason Kupferberg downgraded Coinbase from Buy to Neutral and cut her price target from $77 to $50.
The Coinbase Takeaways: In the downgrade note, Kupferberg listed three headwinds Coinbase is facing in the fourth quarter and beyond:
- Diminished confidence in the crypto ecosystem following the collapse of FTX is likely to weigh on overall crypto trading activity.
- The FTX downfall may also increase regulatory scrutiny on the crypto market and may delay regulatory clarity for investors.
- It may take several weeks before the potential contagion from the FTX fallout is fully understood, and further downside in crypto prices will likely hurt Coinbase's revenues.
"We feel confident that COIN is not 'another FTX' (only $15M of deposits on FTX platform per a Coinbase blog post and $5B of cash on hand as of 9/30), but that does not make them immune from the broader fallout within the crypto ecosystem," Kupferberg said.
Coinbase has struggled with growth throughout the 2022 crypto winter, and the stock is down 81.5% year-to-date. In the third quarter, Coinbase reported a 56% drop in revenue and a $544 million net loss. Kupferberg projects another 24.2% drop in revenue and $197 million net loss in 2023 as well.
Benzinga's Take: Given the chaos and contagion uncertainty in the crypto market following FTX's downfall, it's baffling that Bitcoin BTC/USD prices have held up so well.
Top crypto venture firm Multicoin Capital told investors on Thursday that "many trading firms will be wiped out and shut down" due to FTX contagion, yet Bitcoin prices are actually up 0.5% in the last seven days.
Photo courtesy of Coinbase.
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