Coinbase in trouble – Goldman Sachs revises its advice

Goldman Sachs is leaving the Coinbase ship ! – The bear market is making itself felt! Even the largest cryptocurrency exchanges pay the price, and Coinbase is a perfect example of this. Last May the exchange was forced cancel your hiring planthen lay off 1000 employees next month. Faced with this destructive spiral, the investment firm Goldman Sachs has preferred to give priority to supervision.

Goldman Sachs downgrades Coinbase

On June 27, 2022, Goldman Sachs analysts decided to downgrade the Coinbase shares (COIN). from the state of neutral to that of on sale “. This downgrade is due to the continued decline in cryptocurrency prices over the past 2 months and the decline in activity generated by this sector. The price of Coinbase shares (COIN) is directly influenced by it with a price around $ 56 action, from the day I write this. Just 3 months ago, the shares were trading at over $ 200.

Coinbase Share Price (COIN) Listing on NASDAQ – Source: Trading View

Separately, Goldman Sachs analysts lowered their price target $ 70 to $ 45. These announcements caused Coinbase’s share price to drop by 5.7% before the US stock market opened.

Furthermore, Goldman Sachs in the report following the downgrade of Coinbase shares reveals that the trading volumes in the cryptocurrency market imply ” further degradation “ of the exchange’s revenue base. In fact, Goldman expects these revenues to decline by 61% year-on-year in 2022.

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Coinbase is bogged down: budget restrictions follow one another

We said in the introduction, Coinbase yet try to reduce costs Operating. The company then abandoned its hiring plan. It proceeded to lay off over 18% of its workforce.

However, according to Goldman Sachs all of this will not be enough. Indeed, according to the investment bank, Coinbase will still have to make substantial reductions in its cost base to “drive the resulting money consumption.”

Additionally, Goldman Sachs drew attention to the fact that Coinbase faces the difficult choice of dilute the share capital or impose internal restrictions. And this even at the cost of reducing “effective employee pay”, which can cause the company to lose talent.

Finally, the exchange announced the merger of its Coinbase pro services with the classic Coinbase platform. It is questionable whether this merger has the real goal of improving the user experience of premium services, or whether it saves money.

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