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An analyst at D.A. Davidson lowers lowered his price target on Coinbase to $90 from $135.
Tiffany Hagler-Geard/Bloomberg
A D.A. Davidson analyst remains confident in cryptocurrency exchange
CoinBase Global
’s
ability to navigate through a “crypto winter.”
Christopher Brendler maintained his Buy rating on Coinbase (ticker: COIN. He lowered his 12-month price to $90 from $135 on Wednesday, citing lower trading volumes.
Crypto market conditions have gone from “bad to worse” since Coinbase reported its first-quarter earnings in May, Brendler said in a research note. In what is now being called a “crypto winter,”
Bitcoin,
the largest cryptocurrency, fell to around $18,000 in June. It has declined 1.6% over the past 24 hours to $19,573, according to CoinDesk.
Ether,
the token underpinning the Ethereum blockchain, has declined 1.2% to $1,064.
Despite uncertainties in the crypto market, Brendler said that he expects the company to “successfully navigate near-term challenges and emerge stronger when the next rally comes.” Brendler added Coinbase likely will cut more costs in the future, but competitors are “likely struggling more than COIN, thereby increasing the likelihood of accretive M&A [mergers and acquisitions].”
Coinbase has had to cut costs amid the crypto rout, and announced in June that it was restructuring in an effort to manage expenses. It said it was laying off about 18% of its workforce.
Brendler also added that the retail take rate, or the amount of revenue the company gets from fees on trades from retail investors, has been higher than expected. Management indicated that this was due to a “buy the dip” activity, Brendler said, and he expects this trend continued into the second quarter.
Coinbase is expected to release its second-quarter earnings in early August.
Even though Coinbase has experienced challenges and most likely will continue to experience them in the near term, Brendler said that he thinks Coinbase is “the best brand in the space and the gap should only widen as winter flushes out weaker competitors.”
Shares of Coinbase were down 1% to $53.72 on Wednesday. The stock has had a difficult year, dropping nearly 79% in 2022.
Write to Angela Palumbo at angela.palumbo@dowjones.com