Coinbase Stock Gets Downgraded to Sell Rating as Crypto Winter Persists

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As the crypto winter rages, Coinbase shares have plummeted significantly as most crypto company stocks shed value over the past few months.

Coinbase shares were listed on Nasdaq via a direct listing in April 2021, with the ticker COIN. At the time, the crypto company stock was set at $250, with investors seeing this listing as a massive milestone for the crypto industry.

Since its initial public offering over a year ago, COIN has tapped a notable all-time high of $343 in November 2021. Two days before this, Bitcoin (BTC) tapped a record high of $69,000.

However, things have turned around dramatically for the industry ever since with Bitcoin losing over 70% in eight months, while COIN dipped by 84% within the same period. Yesterday, a report published by Bloomberg showed that after evaluating the stock, analysts at Goldman Sachs have downgraded the crypto stock to a “sell” rating.

In a recently published note to investors, lead research analyst at the multinational bank William Nance commented on the downgrade. Nance explained: “We believe Coinbase will need to make substantial reductions in its cost base in order to stem the resulting cash burn as retail trading activity dries up.”

Nance and his team recently rated several other firms, including Western Union, Fiserv, Fidelity National Information Services, and Shift4 Payments.

Coinbase Faces Tough Decision Ahead as its Bonds Come Under Pressure

Adding to the Goldman Sachs report, Bloomberg analysts explained that equity investors “aren’t the only ones souring on Coinbase.” They added:

“The firm’s bonds have also come under pressure, with its senior unsecured bonds maturing in 2031 among the biggest decliners in the U.S. high-yield market on Monday.”

Finally, Nance asserted that the behemoth cryptocurrency exchange faces some really tough decisions going forwards. He remarked:

“Coinbase faces a difficult choice between shareholder dilution and significant reductions in effective employee compensation, which could impact talent retention.”

 

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Azeez Mustapha

Azeez Mustapha is a trading professional, currency analyst, signals strategist, and funds manager with over ten years of experience within the financial field. As a blogger and finance author, he helps investors understand complex financial concepts, improve their investing skills, and learn how to manage their money.