Berenberg, an investment bank, said in a research report Thursday that Coinbase (COIN) shares are uninvestable in the near term. This is due to the U.S. Securities and Exchange Commission (SEC) filing a lawsuit against the crypto exchange on Tuesday, which has created an overhang on the stock. The bank maintained its hold rating on the stock, and slashed its price target to $39 from $55. Coinbase shares were trading 2.4% higher at $54.47 at time of publication.
Given the potentially significant impact of the lawsuit’s outcome on Coinbase’s U.S. operations, we would expect some investors to reduce their exposure to its platform, the note said. Additionally, a task force of 10 U.S. states alleges the exchange’s staking rewards program violates state securities laws, which adds to the negative overhang on the company’s share price. The SEC’s desired remedy would likely require the complete closure of Coinbase’s core business in the U.S., and this will also weigh on the shares, the report added.
The upshot is that we view COIN shares as uninvestable in the near term, analyst Mark Palmer wrote.