Coinbase stock prices crash near 11% as Goldman Sachs downgrades to ‘sell’

YEREVAN (CoinChapter.com) — Coinbase stock prices took a hit on Monday and crashed by 10.76% to $55.96 from June 24th’s close of $62.71. The fall comes after investment bank Goldman Sachs downgraded its rating on the crypto exchange to “sell” from its previous “neutral” position. 

The downgrade means the investment giant now recommends that traders sell their stock holdings of Coinbase. The recent cryptocurrency market crash has dealt heavy blows to the struggling crypto exchange. 

However, in the research note, Goldman Sachs analyst Will Nance sounded pessimistic about the future of Coinbase. 

“With Coinbase trading at a $11.5 billion market cap relative to its $3.8 billion net cash position, we believe valuation support is limited, as higher revenues in the near term would require higher crypto prices. We forecast breakeven to negative adjusted EBITDA over the next several years,” 

Nance said.

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Coinbase stock prices to fall further? 

Stock prices of Coinbase have been down since November 2021. However, as 2022 began, things went further downhill. 

Year to date (YTD), the crypto exchange has shed 77.71% in its stock prices. However, Goldman Sachs believes it could fall by an additional 23% from current levels. 

The bank slashed its price target on the Coinbase stock to $45 from the previous $70.

“We believe current crypto asset levels and trading volumes imply further degradation in COIN’s revenue base,” 

Will Nance wrote in the note.

The investment bank also said it expects Coinbase’s revenue to slump by about 61% in 2022, caused by the falling crypto market prices. 

Amid heavy losses, Coinbase recently announced it would cut 18% of its total staff. However, Goldman believes these measures are not enough, and the firm will have to take additional steps to stay afloat. These could range from further layoffs, pay cuts, or even shareholder dilution through fundraising. 

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Binance spoils the fun 

If the already falling stock prices of Coinbase were not enough, pressure from competing exchanges is making matters worse. 

Earlier this month, Binance.US announced its decision to drop spot trading fees for certain coins. Customers of the U.S. affiliate of the largest crypto exchange in the world by trading volume can now make spot Bitcoin (BTC) trades for the U.S Dollar without paying fees. 

In addition, they can also spot trade stablecoins like Tether, USD Coin, and Binance USD (BUSD) commission-free.

The move, which will further erode Coinbase’s daily trade volume, has added to the falling stock prices. 

This year’s crash follows a 514% surge in sales last year fueled by the record price gains of Bitcoin and other cryptocurrencies. 

With the cards seemingly stacked against it, one will have to wait to see how low stock prices fall and if Coinbase can survive this crash.