Goldman downgrades Coinbase to "sell" level due to declining prices and activity in the industry The Ecoinomic

In a report on Monday, Goldman Sachs (GS) downgraded Coinbase's ranking (COIN) from "neutral" to "sell" and lowered its price target to $45 from $70.

Goldman said the downgrade was due to the continued decline in cryptocurrency prices and the level of activity in the industry that followed. Coinbase shares fell 5.7% to $59.40 in pre-opening trading.

In the same report, the Wall Street giant upgraded the Robinhood Market (HOOD) from "sell" to "neutral" with a price target of $9.50. Robinhood's shares rose 2.6 percent to $8.21 in pre-opening trading.

Digital asset levels and current trading volume imply a "further downturn" in Coinbase's revenue, which Goldman found was down about 61 percent year-on-year in 2022 and about 73 percent in more than six months.

level

Ceo Brian Armstrong recently announced a remarkable restructuring that included layoffs of 18 percent of its staff, and the bank said further cuts were needed.

Coinbase will need to significantly cut its cost base to be able to reduce the harm of burning money when retail transactions run out, and the company faces a difficult choice between diluting shareholders and significantly reducing employee compensation. It can have a negative impact on talent retention.

Goldman is more optimistic about the competitive environment and the prospect of reducing fee rates due to the announced merger of the Coinbase and Coinbase Pro platforms, potentially reducing conversion costs and offering lower prices to users.

With trading on Coinbase with a Market Capitalization of about $11.5 billion versus a net cash volume of nearly $3.8 billion as of the first quarter of 2022, the bank found limited valuation support because higher revenues in the short term would require higher cryptocurrency prices and break-even forecast volatility with negatively adjusted EBITDA in the past. The next few years.