The bear market has been tough for everyone, and holding on to Coinbase shares may not be wise, according to Wells Fargo.
The multinational financial services company issued a profitability warning stating that the current market conditions may hurt the publicly traded crypto exchange.
- Despite having the early-mover advantage, Coinbase is now facing stiff competition from its rivals which have exploded the space in recent times.
- According to а CNBC report, Wells Fargo implied that the company would sell COIN shares and set a $57 price target.
- Its analyst, Jeff Cantwell, ranked Coinbase with an Underweight rating, arguing that downward pressure on the exchange is inevitable and that the retail pricing is to blame.
- Following the projection, Coinbase shares (COIN) plunged nearly 10% after US markets opened on Thursday. At press time, it is trading at $60.93.
- Amid the industry-wide slump, the cryptocurrency exchange lost more than $1 billion in the second quarter. It generated a revenue of $808 million, down from $2.2 billion a year earlier.
- The company has endured a grim 2022, struggling with a slew of crypto market corrections that, in turn, tanked its stock price. It was also forced to lay off hundreds of employees.
- Troubles from the regulation side of things continue as the US Securities and Exchange Commission (SEC) intensified scrutiny over cryptocurrencies listed on the platform after deeming them as securities.
- The watchdogs previously slapped charges of insider trading against two former Coinbase product managers.
- More recently, Veritaseum Capital sued Coinbase over patent infringement of crypto transfer technology. The lawsuit claims that the crypto exchange violated its rights by making, using, selling, offering to sell, and importing products and services into the US.