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The outlook for crypto exchange Coinbase's shares has never been worse among the investment banking researchers who cover the stock on Wall Street, according to data compiled by The Block Research.
The average price target — the forecast price analysts have for $COIN — has hit an all-time low of $108 per share as of July 26, down from a high of $435 per share in April 2021.
The lack of confidence among analysts in Coinbase's future prospects has tracked the slump in Coinbase's share price, which has fallen by more than 80% since November. Meanwhile, the percentage of buy ratings among analysts has declined from 75% in May 2021 to just 58% as of the time of writing.
Coinbase stock was trading at $58.83 — down more than 70% year-to-date.
Coinbase — which makes the vast majority of its revenues from cryptocurrency trading fees — faces a number of headwinds in what has been described as a new “Crypto Winter.” Declining crypto prices and a retreat of retail market participants have translated into a drop in users for the exchange operator.
In its most recent quarterly earnings report, the firm said that it “believe(s) these market conditions are not permanent” and remains focused on the long-term.
Analysts have not been mollified by Coinbase's optimism, however, given tough market conditions that have only soured due to the fallout from the meltdown of hedge fund Three Arrows Capital and the bankruptcy proceedings of brokerage and financial services rivals including Voyager and Celsius.
The firm also faces new regulatory headwinds, with Bloomberg reporting on Monday that the firm is in the midst of an ongoing probe by the Securities and Exchange Commission. The news follows allegations from the Securities and Exchange Commission and Department of Justice that employees of the exchange traded cryptos on insider information.
“For COIN, we believe this will be an overhang on the stock as the topic of securities designations for crypto assets will likely not have a near-term resolution (and may result in a legal battle),” analysts at Keefe, Bruyette & Woods noted in a research report shared with The Block.
The tumultuous period for Coinbase could open up the door to an activist investor stepping in, according to The Block Research's Greg Lim. “In its current position, Coinbase reflects an attractive activist target for an investor or consortium to push management and the Board to focus on optimization of strategy and costs to align with public shareholder interests,” he said.