The shares of Coinbase Global Inc. (COIN) have been downgraded by analysts at Goldman Sachs after the slump in cryptocurrency prices affected the exchange’s business. This, in turn, highlights the challenges of the bear market.
The downgrade was due to a “persistent downtrend in crypto prices,” Goldman analyst William Nance said in a note, according to Bloomberg. The analyst said Coinbase “will have to significantly reduce its cost base to contain the resulting cash burn if retail trading activity declines”.
According to Bloomberg, there are 20 buy recommendations, 6 hold recommendations and 5 sell recommendations for Coinbase (as of June 27). Stocks with buy recommendation are on the list of analysts’ recommendations. For stocks with a “hold” rating, it is expected that they will develop in about the same way as the market as a whole. The call to liquidate an asset.
Coinbase’s shares have fallen sharply over the past seven months. Source: TradingView.
Coinbase was listed on the Nasdaq in April 2021 and quickly climbed the reference price before the stock exchange listing. The share reached up to 381 US dollars. At this level, COIN had a market capitalization of almost $100 billion. However, since November, COIN has been in a downward spiral and has fallen by 84 percent to less than $ 58 per share. The stock fell 8 percent on Monday, and the market capitalization fell below $ 15 billion.
The sell-off of the Coinbase share has overlapped with the falling crypto prices. Since the all-time high of around $69,000 in November 2021, Bitcoin (BTC) has fallen by almost 70 percent.
Due to the slump in the share price and crypto prices, Coinbase was forced to lay off about a fifth of its employees. The stock exchange has even withdrawn some job offers. CEO Brian Armstrong said that a recession could prolong the so-called “crypto winter” and lead to a longer period with unfavorable market conditions.
As Cointelegraph reported, the rating agency Moody’s recently downgraded Coinbase’s corporating family rating from Ba2 to Ba3. Moody’s stated that Coinbase’s revenue model is tied to trading volume, which has become thinner in recent months due to the massive churn of small traders.
