Analysts at Goldman Sachs have downgraded shares of Coinbase Global Inc. (COIN) from “neutral” to “sell” as troubles for the crypto exchange intensify.
The share price of Coinbase fell about 10% to $56 on Monday after the report was released that Goldman Sachs had set a lowered price target of $45. Coinbase’s share price has fallen over 75% this year, from the highs of $251.
Goldman Sachs’ analyst William Nance attributed the downgrade to a “continued downdraft in crypto prices” and a broader sell-off across the industry, with Bitcoin dropping over 70%.
“We believe current crypto asset levels and trading volumes imply further degradation in COIN’s revenue base”
added Nance, suggesting revenue could plunge as much as 60% over the previous year.
As a result of the crypto market downturn, Coinbase was forced to hand over termination letters to 18% of its staff, in addition to rescinding job offers for incoming employees. However, Nance believes “further cuts are needed” in the workforce for the company to keep up with increasing costs.
Coinbase CEO Brian Armstrong had earlier said that the so-called “crypto winter” could last for an extended period and lead to unfavorable market conditions amid recession fears.
Credit rating agency Moody’s has also downgraded the firm’s Corporating Family Rating from Ba2 to Ba3.
“Today’s rating action reflects Coinbase’s substantially weaker revenue and cash flow generation due to the steep declines in crypto asset prices that have occurred in recent months and reduced customer trading activity.”
According to Bloomberg, as of June 27, Coinbase still has twenty recommendations to buy. At the same time, having five to sell and six to hold from various analysts.