Coinbase Global Inc will likely give up its entire year-to-date gain in the coming weeks and months, says Dan Dolev, a senior analyst at Mizuho.
Coinbase stock could make a new low
This week, Dolev reiterated his “underperform” rating on the cryptocurrency exchange and announced a $30 price objective that represents an alarming 40% downside from here.
His warning is based primarily on a new survey that suggested retail traders are not participating much despite the recent surge in Bitcoin’s price.
Retail trading is COIN’s bread and butter, as it accounted for 83% of revenue in 2021. Our survey, coupled with disappointing market share data and potential signs of take rate pressures in Q4, may mean more headwinds are brewing for 2023 revenue.
Coinbase stock is currently up over 50% for the year with a recent surge, despite Coinbase’s recent announcment it is ending its operations in Japan.
Retail traders are sitting on the sidelines
According to the quoted survey, roughly 90% of the traders that were on the sidelines in December continue to be inactive this month.
On top of that, over 33% that traded last month are sitting it out in January. Dolev’s bearish note on the Coinbase stock reads:
We measured COIN’s volumes against those of 25 largest crypto exchanges. We found that COIN’s share of combined volumes during the rally (bitcoin) was 5.3%, about in line with levels prior to the rally.
Expectations for the company’s current quarter are pretty negative as well. It’s expected to lose $2.39 a share – significantly worse than $3.32 of EPS it had in the same quarter last year.