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• Goldman downgrades to sell as revenue, trading levels slump
• Shares had plunged 75% YTD before Goldman cut its rating
Coinbase Global Inc (NASDAQ: COIN) on Monday tanked almost 11% after Goldman Sachs cut its rating to “sell” from “neutral” and lowered its price target to $45 from $70 as the crypto winter is taking a toll on the industry activity levels.
Shares of the digital currency exchange platform plummeted to $56.02 in the New York trading session. Coinbase is down as much as 77.5% year-to-date.
The digital currency market value stood at $935 billion at the time of reporting, slumping from $2.20 trillion in January.
Goldman said it expects Coinbase’s revenue to fall around 61% year-on-year in 2022 and about 73% in the back half of the year, as the current crypto prices and trading volumes imply “further degradation” in the revenue base.
“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,” Goldman analyst William Nance wrote in a note.
While Coinbase, earlier in June, laid off as much as 18% of its full-time employees, the bank said further cuts are needed.
“Coinbase faces a difficult choice between shareholder dilution and significant reductions in effective employee compensation, which could impact talent retention,” Nance said.
The largest US cryptocurrency exchange, Coinbase, saw its market value surging above $75 billion last year after its blockbuster listing on Nasdaq in April 2021 and Bitcoin hitting a record high.
However, as of Friday’s close, the company was valued at less than $14 billion, with 20 buy ratings, 6 holds, and 5 sell recommendations.
The average analyst share-price target sits at around $117, its lowest level on record, but more than 100% above where it currently trades.
Picture Credit: Forbes
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