Goldman Sachs Reduces Coinbase to Trade Rating
Financial analysts with Goldman Sachs have cut down the grade of Coinbase Inc. This was contained in a client’s note from the analysts on Monday. Coinbase shares have slid down by 83.68% from their all-time high in November 2021.
William Nance of Goldman Sachs said his group of strategists think Coinbase has to reduce its cost base.
Coinbase Share Plummet Heavily
The share value of Coinbase has received a heavy hit as the bear market continues. It is the same for a lot of crypto company shares. They have all lost significant value in the course of the past few months.
Coinbase went public first on the 14th of April, 2021. Its shares were then listed on Nasdaq through a direct listing with its ticker as COIN. The Coinbase IPO went for $250 at that time and investors saw it as a watershed.
After its listing 14 months ago, COIN hit an all-time high of $342.98. This was on the 12th of November 2021. Just two days before then, Bitcoin had hit its highest point of $69,000 per coin.
But while Bitcoin shed 70% over eight months, COIN lost 83.68% in the same period. Goldman Sachs analysts stepped in via a report published on Monday. They downgraded the Coinbase stocks to a sell rating.
In a note they wrote to investors, the analysts made statements about the downgrade. Its lead researcher said Goldman Sachs believes Coinbase needs substantial reductions. The reduction will be in its overall cost base so it can stem off cash burn.
William Nance also recently gave ratings on some other companies such as Western Union. Others he rated include Fidelity National Information Services, Fiserv, and Shift4 Payments.
Coinbase Faces a Stiff Pressure
In the report, there are revelations that it’s not only equity investors in pain. Matt Turner and Subrat Patnaik said Coinbase’s bonds are also under pressure. Its senior unsecured bonds are set to mature in 2031.
Coinbase bonds are among the biggest losers in the high-yielding US market. Nance added that the exchange was encountering some difficulty going forward.
He said Coinbase is going through a difficult patch. It is having to choose between shareholder dilution and a significant cut in staff compensation. The latter would greatly affect talent retention.
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