The crypto winter has taken a toll on
stock, as investors shy away from trading cryptocurrencies amid plummeting prices. That’s not likely to change anytime soon, an analyst said, prompting him to downgrade the stock.
Keefe, Bruyette & Woods analyst Kyle Voigt lowered his rating on Coinbase (ticker:
) stock to Underperform from Market Perform, citing concerns over the company’s near-term revenue growth.
“COIN’s revenue visibility remains very challenging, especially with retail continuing to disengage with crypto trading and with download activity also trending negatively,” Voigt wrote in a research note.
The analyst maintained a $45 price target, which is well below the average target price of $99.76, according to FactSet.
Coinbase stock rose 7.2% to $93.95 on Wednesday. Shares have soared 66% over the last two weeks as Bitcoin and other cryptocurrencies have tried to stage a rally. In Voigt’s view, the price surge is another reason behind the downgrade — the shares have become too expensive given the company’s shaky fundamentals.
For the second quarter, Coinbase reported a loss that was wider than expected, with revenue of $808 million coming in well below consensus estimates as lower trading volumes took a bite out of the top line. The platform’s market share also declined as competition heats up in the trading sphere, Coinbase said when it posted earnings on Tuesday.
“With retail trading falling from prior elevated levels, regulation likely to increase, and new competitors continuing to launch into this sector, we remain on the cautious until we feel more comfortable that the company and industry have navigated some of these potholes,” Voigt wrote.
Analyst sentiment on Coinbase has been gradually cooling over the last few months. Last June, 74% of analysts rated the stock a Buy, 21% a Hold and 5% a Sell. As of Wednesday, 54% of analysts rate the stock a Buy, while 35% rate it a Hold and 12% a Sell.
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