Coinbase stock labeled Underweight by Wells Fargo

Wells Fargo is set to rate Coinbase shares as Underweight in its coverage of the stock amid a crypto winter.

Video Transcript

SEANA SMITH: All right, my play today is Coinbase. Wells Fargo initiating coverage on the stock with an underweight rating and a $57 price target. Now, analyst Jeff Cantwell telling clients in a research note that Coinbase is going to face headwinds, warning that increased competition and lower retail fees will erode its path to sustainable profitability. And he thinks the effects of the crypto winter are going to remain.

Dave, this is a stock that obviously moves in lockstep, many times, with the price of Bitcoin, with the price of what we've seen, more broadly speaking, when it comes to cryptocurrencies. Certainly, has been a rough year so far for this sector. Coinbase has taken a beating. We have Bitcoin down substantially. This call doesn't really surprise me here from Wells.

DAVE BRIGGS: The least surprising thing we've discussed today, Bitcoin down 60% year to date. And it's being traded basically like a very risky tech stock. And in that environment with hiring rates, it's hard to see any path to profitability. Perhaps regulation from the Biden administration could actually help that space because right now, there doesn't seem to be any road, as the analyst said, to profitability.