Goldman Sachs Downgrades Coinbase Shares, Predicts 60% Revenue Decline

Coinbase shares fell 9% to $56.88 on Monday after Goldman Sachs downgraded the company to “sell” from “neutral,” and lowered its price target to $45 from $70.

Analyst Will Nance also wrote in a note to investors that “further cuts are needed” in the company’s headcount, even with Coinbase recently saying it would fire 18% of its workforce in addition to pulling offers from incoming employees.

“We believe current crypto asset levels and trading volumes imply further degradation in COIN’s revenue base,” wrote Nance, adding that year-over-year revenue could fall by more than 60%.

In investment terms, a “neutral” rating is neither bullish nor bearish, and a “sell” recommendation indicates shares are likely to depreciate.

Coinbase, the biggest cryptocurrency exchange in the U.S., started trading on the Nasdaq in April 2021. Shares have declined 85% from COIN’s $381 debut price in April 2021 as Bitcoin and other digital assets also have plummeted, resulting in fewer trades from which the company earns commissions.

The downgrade from Goldman comes just a few days after Moody’s downgraded Coinbase’s corporate debt, writing in a note: “Today’s rating action reflects Coinbase’s substantially weaker revenue and cash flow generation due to the steep declines in crypto asset prices that have occurred in recent months and reduced customer trading activity.”