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Goldman Sachs downgrades Coinbase to ‘Sell,’ stock falls

Shares of Coinbase are moving lower after the crypto stock was downgraded to 'Sell' by Goldman Sachs analysts.

Video Transcript

- Emily, another stock moving in the crypto space, Coinbase shares dropping more than 10% on a dramatic cut in their price target.

EMILY MCCORMICK: That's right, Dave. Now, of course, as we talk about the impact of crypto's price declines on stocks, Goldman Sachs, specifically, is getting more bearish on Coinbase, the largest crypto trading platform in the US. Now analysts over at that firm downgraded shares of Coinbase to sell from neutral. They also slashed their price target on the stock to $45 a share from $70.

Now three big reasons for this. Number one, crypto price declines are likely to weigh heavily on Coinbase's revenues, even more so than consensus on Wall Street believes, according to Goldman Sachs. Number two, even after Coinbase's layoffs of 18% of its employees, it will arguably have to cut more to get costs in line with lowered revenues and crypto trading activities according, again, to Goldman. And then finally, the firm also thinks that the runway for Coinbase to command higher fees from traders on its platform is much smaller now, especially after Coinbase announced earlier this month that it would be merging its Coinbase Pro and Baseline accounts into one service, which might make it easier for users to trade down to a lower-fee offering.

So all of this could mean more downside here for Coinbase. Again, that stock did close lower today on that downgrade from Goldman. Guys?

- Emily McCormick, great stuff. Thank you.