By Senad Karaahmetovic
Bank of America analysts slashed the firm’s rating on Coinbase Global (NASDAQ:COIN) to Neutral from Buy as the FTX collapse further elevates uncertainty.
The recent crash of one of the world’s largest cryptocurrency exchanges has yielded “a number of new headwinds over 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 $15M of deposits on FTX platform per a Coinbase blog post and $5B of cash on hand as of 9/30), but that does not make them immune from the broader fallout within the crypto ecosystem,” the analysts further stated.
The 3 key headwinds identified by BofA analysts are:
- Diminished confidence in the crypto ecosystem is likely to dampen overall trading activity;
- Regulatory clarity may be delayed; and
- Contagion risk and the broader fallout from the FTX collapse could linger
The analysts also reduced estimates, which resulted in a lower price target of $50 per share (down from $77).
Elsewhere, Mizuho analysts reiterated a Neutral rating as daily industry volumes are back to trending 30-40% below YTD averages, which suggests “worn-out consumers who appear uninterested in the category.”
“Following several months of share losses vs. nearly 30 of the largest crypto exchanges, the FTX debacle offered small respite to COIN, which saw modest share gains over the last week. But should investors cheer this? Not in our view, given that other exchanges such as Binance have gained more share,” they added in a note.
Mizuho analysts see more than a 10% downside risk for Coinbase stock from current levels.