Coinbase stock (NASDAQ:COIN) fell by 7% in Tuesday stock trading after Mizuho Financial lowered its price target on COIN with doubts over the Crypto company’s foray into NFTs.
Coinbase shares plunged from $190 per share when markets opened on Tuesday to around $177 when markets closed. Competitors who often trail with COIN on stock charts also fell during the day.
Additionally, the Bitcoin price retraced some Tuesday from gains over the past five days. So Coinbase, whose fortunes are closely intertwined with cryptocurrency price movements, had a headwind from the day’s crypto trading.
Mizuho Downgrade
Writing for SeekingAlpha, Max Gottlich reported that the stock got a lower price target adjustment from Mizuho Financial Group.
Mizuho’s Dan Dolev, a senior analyst in fintech equity holdings for the Japanese bank holding company (with some $1.849 trillion in assets), explained the downgrade in a note to clients: “we question the strategic rationale of chasing NFTs… especially as the NFT hype seems to wane.”
Dolev also advised clients that if Coinbase were in the lower end of the guidance range in its financial reports, it could face $500 million in EBITDA-adjusted losses for 2022.
Stock Price Reflecting More than NFT Ambitions in 2022
While Coinbase has a market for non-fungible tokens underway (its NFT team announced in mid-March that the launch would be soon), the exchange is also in the midst of a roadmap loaded with other development projects. cryptography, including expansion into India and Brazil and Coinbase Pay, a Web3 upgrade to its non-custodial wallet launched last month.
Although Coinbase is already available in Brazil, the company is reportedly close to finalizing a deal to acquire 2TM, the parent company of Mercado Bitcoin. Mercado is the largest cryptocurrency exchange operating in Brazil and all of Latin America. (Neither company has yet commented publicly on the purported acquisition.)
Coinbase is also on the move in India – backing two local crypto unicorns CoinDCX and Coinswitch Kuber, pumping $150 million of capital into crypto homebrew and Web3 fintech startups, and opening an office with 300 new employees in Bangalore, India’s Silicon Valley. . The exchange plans to onboard 1,000 employees into the Coinbase India hub this year.
Is The Non-Fungible Token Business Really Winding Down This Year?
Dolev wrote in his note to investors that “interest in NFTs appears to be dwindling.” Are NFTs really heading into a bear market in 2022? One that would imperil Coinbase stock even with the help of “The Official Bill Murray NFT 1000 collection” to debut on the Coinbase NFT exchange?
The short-term bearish case for the non-fungible token market would include the nearly 50% decline in trading volume last month on OpenSea, the leading non-fungible exchange. But that’s not all. The precipitous decline was one of those harsh flash-bubble pullbacks that veteran crypto investors are quite accustomed to in this decade.
In January, OpenSea had reached its highest transaction volume ever by far— around $5 billion. And users continued to mint new NFTs like crazy amid the exchange volume rout. Meanwhile, many popular non-fungible token projects also reached eye-popping ATH values for their tokens even as overall trade volume fell.
