Coinbase declines as Goldman downgrades to sell after 75% rout

Bloomberg

Goldman Sachs Group analysts downgraded Coinbase Global to a sell rating as the crypto winter continues to take its toll on the struggling digital currency exchange.
Shares of the firm slumped 11% to $55.96, extending their decline this year to 78% as Bitcoin trades at less than half its value from six months ago. Goldman analyst William Nance cited the “continued downdraft in crypto prices” and broader drop in activity levels across the industry. Coinbase had fallen 75% this year prior to the downgrade.
Coinbase quickly became the equities market poster child for the boom in digital currency prices last year with the largest US cryptocurrency exchange seeing its value surge above $75 billion as Bitcoin hit a record high. Since then, the company has been dogged by a laundry list of issues including declining revenues and trading volumes as the broader crypto market endures one of its worst selloffs in history. Goldman Sachs was one of the Wall Street banks that advised Coinbase on its direct listing in April 2021.
The company was valued at about $12.4 billion. Coinbase has 20 buy ratings, 6 holds and 5 sell recommendations, according to data compiled by Bloomberg. The average analyst share-price target sits at about $117, its lowest level on record, but more than 100% above where it trades.
Equity investors aren’t the only ones souring on Coinbase. The firm’s bonds have also come under pressure, with its senior unsecured bonds maturing in 2031 among the biggest decliners in the US high-yield market.
Increased competition from other firms has also weighed on the crypto exchange. Earlier this month, Binance. US revealed that it would be offering zero-fee trading for Bitcoin and said it had plans to also eliminate fees on other tokens in the future. Coinbase also announced this month that it would be laying off 18% of its workforce as it attempts to reel in operating expenses that ballooned to a record $1.7 billion in the first quarter.

“Coinbase faces a difficult choice between shareholder dilution and significant reductions in effective employee compensation, which could impact talent retention,” Nance said.