Coinbase Crypto Momentum Stalls, Valuation Stretches: Cut to Sell at Compass Point
Main Idea
Compass Point downgrades Coinbase (COIN) to 'Sell' due to weaker-than-expected performance, rising competition, and regulatory skepticism, lowering its price target from $330 to $248.
Key Points
1. Compass Point downgraded Coinbase (COIN) to 'Sell' and reduced its year-end price target from $330 to $248, citing weak performance and rising competition.
2. Coinbase missed Q2 expectations, and early Q3 trends are also weak, with subscription and services revenue falling short of estimates.
3. Analysts highlight concerns over Coinbase's valuation, trading at 44x annualized Q3 EBITDA forecasts, amid headwinds in retail trading and competition from ETFs and DeFi.
4. Compass Point expressed skepticism about the CLARITY Act passing in 2025, which is seen as key to crypto regulatory reform.
5. The downgrade comes as crypto market momentum stalls despite broader stock market recovery, with Coinbase's premium valuation expected to compress.
Description
Coinbase (COIN) has been downgraded to a sell rating by Compass Point, which also cut its year-end price target from $330 to $248, citing weaker-than-expected earnings and fading interest in crypto equities as key risks. COIN is trading modestly higher on Monday at $316 following last week's earnings-related 18% plunge. “While we remain constructive on the current crypto cycle, we expect a choppy 3Q alongside weak August/September seasonality and waning retail interest in crypto treasury stocks,...
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