Breaking News
Investing Pro 0
Cyber Monday Extended SALE: Up to 60% OFF InvestingPro+ CLAIM OFFER

Wells Fargo Starts Coinbase at Underweight, Sees 15% Downside Risk

Stock Markets Sep 29, 2022 08:04AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. Wells Fargo Starts Coinbase (COIN) at Underweight, Sees 15% Downside Risk
 
RIOT
-1.54%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
COIN
-3.11%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
BKKT
+4.71%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 

By Senad Karaahmetovic

A Wells Fargo analyst initiated research coverage on Coinbase Global (NASDAQ:COIN) at an Underweight rating. Coinbase shares are down over 1% in pre-open Thursday trading.

The price target is set at $57 per share, indicating a downside risk of just over 15% compared to yesterday’s closing price of $67.31. The analyst says Coinbase operates in a “challenged environment” which will continue to impact its operations.

More precisely, the Underweight rating is a result of the analyst's view that COIN is impacted by several strong headwinds, namely:

  1. Retail pricing is likely to decline,
  2. Rising competition from Binance and FTX,
  3. More restrictive government stance toward crypto, and
  4. Macro environment will likely further weaken from here.

“Though we believe in the value of COIN's platform, we see its early-mover advantages gradually being eroded away as the competition increasingly mimics the COIN ecosystem,” the analyst said in a client note.

Furthermore, the analyst sees risks to a consensus as the “crypto winter” impact remains “significant.”

“We forecast a 56% Y/Y decline in 3Q retail transaction revenue to $451M; we're below consensus. We're also below consensus in '23 as we see macro weakness and a tougher regulatory environment constraining COIN's volumes/revenue,” the analyst added.

Net-net, the analyst struggles to understand the clear path for Coinbase to become a profitable business on a sustainable basis.

“Regulation in particular will be a challenge for COIN—for example, note the recent discussion coming from the SEC about “cryptos as securities” (e.g., for staked assets). Though COIN is managing through all of these (including by offering products like a subscription model), we don't see a clear path for the company to reach profitability,” the analyst concluded.

Elsewhere, the analyst also initiated research coverage on Riot Blockchain (NASDAQ:RIOT) and Bakkt Holdings (NYSE:BKKT) at Equal Weight. Price targets are set at $7 and $2.50 per share, respectively.

Wells Fargo Starts Coinbase at Underweight, Sees 15% Downside Risk
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email