By Sinad Karametovic
Bank of America analysts downgraded the company Coinbase Global (NASDAQ:) to neutral from a buy as the collapse of FTX added to the uncertainty.
The recent collapse of one of the world’s largest cryptocurrency exchanges has created “a number of new headwinds in the near/medium term” for Coinbase, they wrote in a note sent to the bank’s clients.
We feel confident that COIN is not “another FTX” (only $15 million in FTX deposits per Coinbase blog post and $5 billion in cash on hand as of 9/30), but that doesn’t make it immune to the broader ecosystem ramifications. for cryptocurrencies.
The three major headwinds identified by Bank of America analysts are:
- Dwindling confidence in the cryptocurrency ecosystem is likely to dampen general trading activity;
- Regulatory clarity may be delayed; And the
- Infection risks and the broader repercussions of the FTX collapse may persist
Analysts also cut estimates, which lowered the price target by $50 per share (down from $77).
Elsewhere, Mizuho analysts reiterated the neutral rating as daily industry volumes are back on trend at 30-40% below year-to-date averages, indicating “sloppy consumers appear uninterested in this category.”
“After several months of equity losses against nearly 30 of the largest cryptocurrency exchanges, the FTX debacle has provided a small respite for COIN, which has seen modest stock gains over the past week. But should investors cheer this up? Not in our view, Considering that other exchanges such as Binance have gained a larger share,” they added in a note.
Mizuho analysts see a 10% downside risk for Coinbase stock from current levels.