Coinbase share crashes because Goldman Sachs lowers the rating to sell

Coinbase share crashes because Goldman Sachs lowers the rating to sell

The Coinbase share fell by more than 10 %on Monday after Goldman Sachs had downgraded it on "Sell", and referred to the potential for large sales declines this year.

Goldman analysts led by Will Nance said in a research note that the current cryptocurrency prices and trading volumes indicate further declines of the coin base revenue.

Coinbase has generated more than 90 % of his income from trade fees in the past.

The analysts assume that Coinbase revenues will decrease by 61 % in 2022 and 73 % in the second half of the year alone, since the cloudy macro prospects continue to cause pain in the industry.

The recent Goldman rating lowers the price target for Coinbase from $ 70 per share to $ 45. The shares of the leading US stock exchange were worth around $ 56 on Tuesday after they recovered 1 % of the losses on Monday.

If the Goldman analysts are on the right track, the Coinbase share price could fall by another 20 % from here.

Coinbase recently said that it would reduce its workforce in the expectation of a US recession by 18 %-or 1,100 employees. The company warned that its trade revenue could be affected by the crypto winter, a time that is characterized by a persistent downturn in digital assets.

Goldman expects coinbase to make further staff cuts, since the previous personnel reduction will only bring the number of employees back to the stand from the end of the first quarter of this year.

The analysts of the Wall Street main support assume that Coinbase "has to reduce its cost base considerably" in order to contain his cash burst, since "the retail activities lower".

Goldman is also pessimistic about the decision of Coinbase to set its professional platform, which are aimed at dealers, and to combine the entire trade in a single application.

"We believe that the combination of these platforms reduce the change costs between the two platforms and may lead to compression of the fee rates," said the analysts.

The Coinbase share has been released down since its IPO in April 2021 with an evaluation of more than $ 86 billion. The company's market value is now less than $ 12.5 billion after it has dropped by 85 % since its direct list.

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The article Coinbase Stock Tumbles As Goldman Sachs Cut Rating to 'Sell' is not a financial advice.