Goldman Sachs Reportedly Downgrades Coinbase’s Stocks to ‘Sell’ as COIN Drops 9% Daily

cryptocurrency

The multinational investment giant – Goldman Sachs – reportedly recommended selling Coinbase (COIN) stocks is a better option than holding or buying them at the moment. As a result, shares of the exchange plunged by more than 9% as the market opened to under $60.

From ‘Neutral’ to ‘Sell’

The current cryptocurrency bear market has hurt several players in the industry, but its impact seems to be increasingly significant for the US-based trading platform – Coinbase. According to recent coverage, the global banking institution – Goldman Sachs – expects the exchange’s revenue to decline in the second quarter of 2022 in 2022. Thus, it has downgraded COIN stocks from “Neutral” to “Sell”.

“We believe current crypto asset levels and trading volumes imply further degradation in COIN’s revenue base, which we see falling ~61% Y/Y in 2022, and ~73% in the back half of the year,” William Nance – Analyst at Goldman Sachs – commented.

Two weeks ago, Coinbase announced plans to lay off 18% of its total workforce due to macroeconomic conditions. Brian Armstrong, CEO of the company, believes that the United States is heading into a recession and therefore cost-cutting measures are urgently needed.

This came after the highly disappointing Q1 2022 numbers when the firm reported net losses in excess of $400 million.

Nonetheless, Goldman Sachs believes that aside from layoffs, the crypto exchange should take additional steps to weather the turbulent times:

“We believe COIN will need to make substantial reductions in its cost base in order to stem the resulting cash burn as retail trading activity dries up.”

Unsurprisingly, Goldman’s recommendation negatively affected Coinbase shares. COIN fell more than 5% in Monday’s premarket trading to $59.50. As Wall Street opened, shares fell further and fell to $56 at the time of this writing.

Coinbase’s Journey on NASDAQ

Last April, the cryptocurrency platform became the first major exchange to have its shares publicly traded. COIN stocks had a debut price of $381, while shortly after entering NASDAQ, they surged to $400.

Despite the initial hype, the following months weren’t as successful and the stock fell to around $230 in late September and early October.

Bitcoin’s surge to an all-time high in November, combined with the skyrocketing prices of many altcoins, though, fueled COIN to a new jump to over $340.

Towards the end of last year and the beginning of 2022, the digital asset market ran out of steam and, understandably, Coinbase shares headed south. Currently, their USD valuation is 84% ​​below record highs in April 2021.

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