By Sam Boughedda
Coinbase's (NASDAQ:COIN) price target was cut from $84 to $70 at Oppenheimer on Monday, although the analysts maintained a Buy rating on the stock.
However, they acknowledged that the demise of Silicon Valley Bank (NASDAQ:SIVB), Silvergate Capital (NYSE:SI), and Signature Bank (NASDAQ:SBNY) is jeopardizing blockchain development in the US.
"The spectacular fallout of SIVB, the voluntary liquidation of SI, and the abrupt shutdown of SBNY have seriously impacted not only the ecosystem of digital assets but also the ecosystem of Silicon Valley," wrote the analysts. "While the emergency backstop will likely stabilize the financial system, these failures have already broken some key infrastructures of the public blockchain/digital assets industry in US, namely SEN, and Signet."
Oppenheimer expects liquidity and trading volume to "decrease until someone fills the void, and the uncertainty will linger in USDC and the industry. Therefore, we lower our revenue estimate and PT of Coinbase to reflect heightened risks," the analysts added.
Mizuho analysts maintained an Underperform rating and $30 price target on Coinbase, labeling USDC as the "unstable coin."
"On Friday, COIN said that it is temporarily pausing USDC conversions after Circle disclosed that $3.3bn of its USDC reserves were held at SIVB. This led to a 10%+ drop in USDC market cap, with its value falling below par for the first time since 2020. USDC revenue is critical to COIN, accounting for ~80% of its interest income and 23% of total revenue in 4Q," explained the analysts.
"We estimate that if USDC market cap remains at current levels, this could drag on COIN's 2023 revenue by ~2%, with an even greater impact on profitability. If, however, USDC bleeding continues, the hopes for positive adj. EBITDA in 2023 may prove overly optimistic," they added.