The Goldman Sachs Group, Inc. is an American multinational investment bank and financial services company headquartered in New York has downgraded Coinbase stock (NASDAQ: COIN) from a buy to a sell.
The Coinbase stock has plunged by more than 5 to trade at $59.36 in the pre-market trading on Monday and when the markets opened it slid further before surging to where it had closed on Friday ($62.71).
Goldman Sachs downgraded COIN stock despite the fact that the stock registered a 9% rise over the past week.
The revised price target
Goldman Sachs downgraded the Coinbase stock from its previous price target of $70 to a price target of $45. The main reason for the bank to revise the price target downwards was due to weeks of turbulence within the crypto market that has negatively affected the crypto exchange.
According to a note issued by the bank, the bank expects the dropping crypto prices and the dropping trading volumes to cause a further drop in Coinbase’s revenue. Analysts are also forecasting that the exchange shall register a “breakeven to negative adjusted earnings” before taxes, interest, depreciation, and amortization.
Goldman’s downgrading comes just four days after Moody’s downgraded Coinbase’s senior unsecured notes. Moody’s has downgraded Coinbase’s Corporate Family Rating (CFR) from a Ba2 to a Ba3 and also downgraded its senior unsecured notes to from Ba1 to Ba2.
According to Goldman Sachs analysts:
“Lastly, we are incrementally more bearish on the competitive environment and the outlook for fee rate compression given the announced merging of the Coinbase and Coinbase Pro platforms, which has the potential to reduce the switching costs and make lower pricing more easily available to its users.”
Additionally, Goldman’s downgrading comes two weeks after Coinbase laid off 18% (approx. 1,100 workers). The layoff was made in anticipation of tougher ties ahead.