© Reuters
By Senad Karaahmetovic
Shares of Coinbase (NASDAQ:) are down more than 7% on Thursday, after analysts at Cowen downgraded the stock from outperforming to market performance, with a price target cut more than 50% to $36. per share.
The new price target reflects the reduction in revenue and adjusted EBITDA estimates for 2023, which are now lower than on the street. Analysts pointed to two key factors driving the downward revision to the price target: 1) low visibility of retail trading volumes stabilizing in 2023; and 2) the high potential for SEC enforcement actions.
“The SEC must take enforcement action against trading platforms before its Chairman Gensler testifies before Congress at the end of the first quarter. We believe there is risk to a significant portion of COIN trading volumes non-BTC/ETH (36%) and custody assets (31%) that could be considered securities by regulators, which would exacerbate the deterioration of trading volumes,” they said in a note. downgrading.
Given these high risks, analysts see the potential for “another significant round of downsizing in early 2023.”
“We continue to believe COIN is well capitalized to execute product expansion in a multi-year downturn… We believe a risk factor for stocks is that sufficient headcount/cost reductions are not achieved. taken in early 2023,” they added.