1 week ago
Coinbase (COIN) has been downgraded to a merchantability standing by Compass Point, which besides chopped its year-end terms people from $330 to $248, citing weaker-than-expected net and fading involvement successful crypto equities arsenic cardinal risks.
COIN is trading modestly higher connected Monday astatine $316 pursuing past week's earnings-related 18% plunge.
“While we stay constructive connected the existent crypto cycle, we expect a choppy 3Q alongside anemic August/September seasonality and waning retail involvement successful crypto treasury stocks,” analysts wrote. “We besides expect expanding stablecoin contention to measurement connected some COIN and CRCL's valuations successful 2H25.”
Coinbase missed expectations for second-quarter results, and aboriginal third-quarter trends aren’t looking overmuch better. Subscription and services revenue, a metric investors spot arsenic a reliable income stream, came successful 8% beneath Wall Street estimates successful Q2. The midpoint of the company’s Q3 forecast is besides 5% beneath consensus.
“‘Other S&S revenue’ was a cardinal contributor to COIN's 2Q/3Q miss,” Compass Point wrote, pointing to a crisp quarter-over-quarter diminution successful Coinbase One and different tech-related fees — segments galore investors had hoped would thrust semipermanent growth.
Compass Point’s downgrade comes arsenic the crypto marketplace loses momentum contempt broader banal markets recovering aft past week’s dip. Bitcoin (BTC) and ethereum (ETH) person struggled to summation ground, and retail investors look to beryllium pulling backmost from “TreasuryCo” stocks — companies holding ample amounts of BTC oregon different cryptos connected their equilibrium sheets. This includes Coinbase and Strategy (MSTR), the second of which precocious slowed its bitcoin buying gait and shifted toward raising funds done preferred equity alternatively than banal offerings.
The analysts flagged that elevated leverage successful crypto markets poses a further risk. July’s rally was fueled by assertive trading, but with unfastened involvement rebounding aft a abbreviated dip successful liquidations, a deeper sell-off could trigger different circular of forced selling.
Valuation is besides a concern. Despite the anemic Q2 results, COIN shares rallied 56% from May to July. Compass Point warns that “COIN is inactive trading astatine 44x annualized 3Q25E Street EBITDA forecast,” which it believes is excessively precocious fixed headwinds successful retail trading, contention from ETFs and DeFi, and constricted near-term regulatory breakthroughs.
Compass Point was besides doubtful the CLARITY Act — a measure seen arsenic cardinal to regulatory betterment — would walk this year. “We’re much skeptical towards a marketplace operation measure passing this year,” the steadfast said, projecting question successful aboriginal 2026 instead.
Coinbase has floated the thought of offering banal trading to users, but analysts are unconvinced it volition beryllium a meaningful gross stream, particularly with competitors similar Robinhood already acold ahead.
“Under a backdrop of anemic crypto performance, we spot COIN's premium valuation compressing backmost towards its anterior range,” the study concluded.
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