Coinbase Downgraded To 'Underweight:' JPMorgan Analysts Blame Regulatory Risks, ETF Letdown
Portfolio Pulse from Ivan Crnogatić
JPMorgan downgraded Coinbase (NASDAQ:COIN) to 'Underweight' with a maintained price target of $80, citing regulatory risks and disappointing performance of Spot Bitcoin ETFs. The report acknowledges Coinbase's efforts to diversify with derivative platforms and the Layer-2 Base chain but highlights challenges from a competitive market, Binance's dominance, and ongoing SEC litigation. The analysts have adopted a 'normalized earnings' valuation approach based on cryptocurrency market capitalization.
January 24, 2024 | 2:25 pm
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NEGATIVE IMPACT
Coinbase downgraded by JPMorgan to 'Underweight' due to regulatory risks and underperformance of Bitcoin ETFs, maintaining an $80 price target.
The downgrade by a major financial institution like JPMorgan can negatively impact investor sentiment and stock price in the short term. The focus on regulatory risks and the underperformance of Bitcoin ETFs, which are seen as key growth drivers for Coinbase, are likely to be viewed as significant headwinds by the market.
CONFIDENCE 85
IMPORTANCE 90
RELEVANCE 100
NEUTRAL IMPACT
JPMorgan report compares the launch of Bitcoin ETFs with the historical performance of gold-backed ETF GLD, noting high initial sales but disappointing performance.
While GLD is mentioned as a historical parallel to Bitcoin ETFs, the direct impact on GLD's stock price due to this comparison is likely to be neutral. The focus of the report is on Coinbase and Bitcoin ETFs, not on GLD's current performance or outlook.
CONFIDENCE 75
IMPORTANCE 50
RELEVANCE 50