Barclays has downgraded its rating of Coinbase stock to Underweight from Equal Weight ahead of the crypto exchange’s second-quarter earnings report on August 8th. Despite the downgrade, the bank raised its price target for Coinbase shares to $70 from $61. At the time of publication, Coinbase shares were trading 1.4% lower at $84.79 in pre-market trading.
Analysts led by Benjamin Budish noted that while Coinbase is likely to be a long-term winner in the crypto ecosystem, fundamentals remain challenged and recent positive developments such as price actions, increasing rates, and cost rationalization likely have little further to run. June exchange volumes were modestly improved from May, but overall second-quarter volumes were worse than in the first quarter, and July metrics are also trending lower month-on-month.
Barclays also pointed out that while Coinbase shares have appreciated following news of a BlackRock-sponsored spot bitcoin ETF application, for which Coinbase is expected to be custodian and prime broker, the bank does not think this accurately reflects the potential eventual P&L impact that could accrue to Coinbase.