Piper Sandler says there is too much uncertainty surrounding Coinbase and investors should stay away. The company downgraded Coinbase to neutral from overweight, citing its recent Securities and Exchange Commission lawsuit in which the federal agency accused the company of operating as an unregistered broker and exchange. A lack of regulatory clarity also led to the downgrade, according to analyst Patrick Moley. He lowered his price target to $60 from $65, implying the stock is down 24.9% from Monday’s close. While Moley noted that Coinbase shares are up 126% year-to-date — with a 55% rise since June 6, when the SEC filed the lawsuit — he said the appreciation has “probably was driven by a combination of rising crypto prices and a number of the big asset managers filing applications for spot Bitcoin ETFs (some of which have named COIN as their custodian).” “However, rising crypto prices have not translated into increased trading volumes for COIN in recent quarters and the timing of the bitcoin spot ETF approval is anyone’s guess,” said Moley said. The analyst expects Coinbase to post its lowest quarterly trading volumes and monthly user trading totals in over two years for the second quarter. Shares were down more than 2.7% on Wednesday in premarket trading. “Bottom line, while we continue to believe that COIN is positioned to be a major player in the space when we eventually achieve regulatory clarity in the US, we would like to see more progress on the regulatory front and a compelling turnaround in the underlying fundamentals of the business before turning more positive on COIN,” Moley said. — CNBC’s Michael Bloom contributed to this report.
Piper Sandler says Coinbase can fall 25% as regulatory uncertainty looms
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