The multinational investment giant – Goldman Sachs – reportedly recommended selling Coinbase (COIN) stocks is a better option than holding or buying them at the moment. As a result, shares of the exchange plunged by more than 9% as the market opened to under $60.
From ‘Neutral’ to ‘Sell’
The ongoing cryptocurrency bear market has harmed multiple participants in the industry, but its impact seems to be increasingly significant to the US-based trading venue – Coinbase. According to a recent coverage, the global banking institution – Goldman Sachs – expects the exchange’s revenue to decrease in Q2, 2022 further2022. Thus, it downgraded the COIN stocks from “Neutral” to “Sell.”
“We believe current crypto asset levels and trading volumes imply further degradation in COIN’s revenue base, which we see falling ~61% Y/Y in 2022, and ~73% in the back half of the year,” William Nance – Analyst at Goldman Sachs – commented.
Two weeks ago, Coinbase disclosed plans to lay off 18% of its total workforce due to the macroeconomic conditions. Brian Armstrong – CEO of the company – believes the USA is heading towards a recession, and thus, cost-cutting measures are urgent.
This came after the highly disappointing Q1 2022 numbers when the firm reported net losses in excess of $400 million.
Nonetheless, Goldman Sachs thinks that apart from the staff redundancies, the crypto exchange should take additional measures to pass through the turbulent times:
“We believe COIN will need to make substantial reductions in its cost base in order to stem the resulting cash burn as retail trading activity dries up.”
Unsurprisingly, Goldman’s recommendation negatively affected Coinbase’s shares. COIN dropped by over 5% in Monday premarket trading to $59.50. As Wall Street opened, the stocks plummeted even further and are down to $56 as of writing these lines.
Coinbase’s Journey on NASDAQ
Last April, the cryptocurrency platform became the first major exchange to have its shares publicly traded. COIN stocks had a debut price of $381, while shortly after entering NASDAQ, they surged to $400.
Despite the initial hype, the following months were not that successful, and shares dropped to approximately $230 at the end of September and the beginning of October.
Bitcoin’s surge to an all-time high in November, combined with the skyrocketing prices of many altcoins, though, fueled COIN to a new jump to over $340.
Towards the end of last year and the beginning of 2022, the digital asset market lost steam, and logically, Coinbase’s stocks headed south. Currently, their USD valuation is 84% lower compared to the all-time high levels in April 2021.