Analysts at multinational investment bank and financial services firm Goldman Sachs Group Inc. downgraded Coinbase Global Inc. in a note to investors Monday. Today, Coinbase shares are down 83.68% from the stock’s all-time high (ATH) in November 2021. Goldman analyst William Nance explained that his group of market strategists believes “Coinbase needs to make a significant reduction in its cost base.”
Goldman downgraded Coinbase, COIN stock down 83% from its price high
Like many crypto company shares have lost considerable value over the past few months, Coinbase shares have suffered during the bear market; when Coinbase first went public on April 14, 2021, its stock was listed on Nasdaq through direct listing under the tickerCoinbase was listed on Nasdaq through a direct listing under the ticker. COIN
Following the stock out of the gate 14 months earlier, in that timeframe COIN hit ATH at $342.98 per share on November 12, 2021. Two days earlier,Bitcoin (BTC)hit a lifetime price high at $69K per unit.24} While BTCfell 70% over the next eight months, COIN has fallen 83.68% since that time. On Monday, analysts at Goldman Sachs downgraded Coinbase shares to a sell rating in a report published by Bloomberg.
In a note to investors, William Nance, lead research analyst for the payments and digital assets sector at the investment bank, issued a statement on the downgrade.” We believe Coinbase needs to make significant reductions in its cost base to stem the resulting cash burn as retail transaction activity dries up,” Nance explained. Nance has recently rated a number of other companies, including Western Union, Fiserv, Fidelity National Information Services, and Shift 4 Payments.
Pressure on bonds, Goldman notes Coinbase “faces difficult choices”
In addition, Bloomberg’s Subrat Patnaik and Matt Turner note in their report that equity investors ” . are not the only ones unhappy with Coinbase,” they detailed.” The company’s bonds are also under pressure, with its senior unsecured notes, which mature in 2031, one of the biggest decliners in the U.S. high-yield market on Monday.” Patnaik and Turner write. Nance added that cryptocurrency exchanges face some difficult decisions ahead.
“Coinbase faces the difficult choice of diluting shareholders and significantly reducing effective employee compensation, which could impact staffing,” Nance said.
Goldman’s downgrade follows the company’s layoff of 18% of its staff, and Coinbase has alsocombined its Coinbase Pro (exchange) product with users’ Coinbase accounts. The company recently launched a derivative product (nano bitcoin futures) via the Coinbase Derivatives Exchange. Coinbase has faced a number of lawsuits since its IPO, including two separate class action lawsuits over the former stablecoin; two separate class action lawsuits over GYENand Terra’s UST tokens.
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