The experts based their opinion on the decrease of the company’s market share in the conditions of increasing competition. This results in lower transaction fees and lower profitability, they added.
The path to sustainable profits will prove difficult given the current trends that continue in the cryptocurrency space, client filings said.
Wells Fargo analysts
Analysts estimate the intrinsic value of Coinbase shares at $57. On September 29, the stock traded at $61.94. The company’s capitalization has decreased by 75.5% since the beginning of the year.
S&P Global downgraded Coinbase
We remind you that in August, S&P Global lowered Coinbase’s corporate rating from “BB+” to “BB” and maintained a “negative” outlook.
Coinbase reported a net loss of $1.1 billion for the second quarter of 2022, double what analysts had predicted. Net income fell to $803 million in the April-June period from $2.03 billion last year. Trading commissions account for 82% of net income.
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CEO Brian Armstrong
In August, the exchange’s CEO Brian Armstrong said the platform was cutting costs and focusing on managing subscriptions and services during the crypto winter.
That same month, Coinbase agreed to partner with BlackRock. The latter’s clients will have direct access to digital asset trading through the Aladdin portfolio management system.
Previously, it was known that the platform tried to make money through proprietary trading. For this purpose, the company has allocated 100 million dollars.