Shares in crypto exchange Coinbase (NASDQ:COIN) have dropped by over 9% today to around $56/share following a downgrade from Goldman Sachs. Coinbase is not quite at its 52-week low of around $40 a share but they are far off its 52-week high of over $368 a share.
Goldman Sachs analyst Will Nance dropped their price target from $70 to $45 shifting from neutral to sell.
According to reports, Nance said Coinbase would need to make “substantial reductions” in its expenses to diminish its cash burn as retail trading in crypto “dries up.”
He also predicted a possible shareholder dilution adding that fundamentals are weak.
In contrast to his bearish comments on Coinbase, Nance upgraded Robinhood, a trading platform supporting both digital assets as well as traditional securities, from a sell to a neutral.
Recently, Binance announced it was eliminating trading fees for Bitcoin for US investors. This may put additional pressure on Coinbase which has a reputation as an expensive exchange.
Meanwhile, the entire crypto market has tanked in recent weeks due to concerns about the broader economy, possible contagion as well as looming new regulations that may impact crypto markets.
Meanwhile, Coinbase continues to iterate and add new features and services as it navigates choppy waters. Last month, Coinbase celebrated being in business for ten years. Coinbase CMO Kate Rouch commented at the time:
“Volatility is painful, and can be scary. Nobody likes to lose money in the short term — whether in crypto, or the stock market more broadly. That said, volatility is also natural for emerging technological breakthroughs like crypto. At Coinbase, we’re inspired by the long term view and the spirit of those who continue to keep innovating no matter the external environment.”
She added that builders take a long-term view and that is core to Coinbase’s DNA.