Coinbase NASDAQ:COIN shares fell to their lowest level in more than two years on Friday as Wall Street analysts lowered price targets following the cryptocurrency exchange’s third-quarter results.
A broader sell-off in digital assets and concerns surrounding a reported $6.3 billion Binance hack added to the pressure on crypto-related stocks.
COIN shares dropped more than 14% during trading, reaching levels last seen in February 2024.
Bitcoin also came under pressure, falling as much as 4.8% over 24 hours to around $76,900.
Other cryptocurrency-linked stocks also declined.
Circle Internet Group fell 10.7%, while Strategy shares lost 8.88%, reflecting broader weakness across the digital asset sector.
Needham, Rosenblatt, JPMorgan, Barclays and other investment firms lowered their price targets on Coinbase following its third-quarter earnings report.
Coinbase reported earnings of $2.51 per share, significantly exceeding the consensus estimate of $0.08, according to Koyfin.
However, revenue of $1.21 billion came in slightly below expectations of $1.22 billion.
Analysts highlighted weaker cryptocurrency trading activity, a softer revenue outlook and higher operating costs as concerns.
Barclays lowered its price target to $120 from $149 while maintaining an Underweight rating.
The firm said Coinbase’s revenue run rate heading into the fourth quarter was trending lower, while costs were expected to exceed previous estimates.
This prompted a sizeable reduction in its near-term earnings before interest, taxes, depreciation and amortisation (EBITDA) forecasts.
Needham also reduced its price target to $197 from $205 but maintained a Buy rating.
Despite the earnings beat, analysts remained cautious about the company’s near-term revenue prospects as trading activity weakened.
Coinbase’s expansion beyond conventional cryptocurrency trading has provided some support amid subdued market conditions.
Rosenblatt analyst Chris Brendler described the third-quarter results as the “clearest evidence yet” that Coinbase’s Everything Exchange strategy was working.
The analyst said newer products were absorbing some of the weakness in cryptocurrency trading that would otherwise have weighed more heavily on revenue.
Wells Fargo also highlighted prediction markets and USDC as areas helping cushion the weaker cryptocurrency environment.
However, the firm said the quarterly results did not indicate a broader acceleration in business activity.
JPMorgan analyst Kenneth Worthington noted that the transaction environment remained challenging and that assigning value to Coinbase’s expanding prediction markets business was difficult.
Goldman Sachs pointed to Coinbase’s scale, profitability, distribution, expense discipline and expansion into prediction markets and cryptocurrency derivatives as factors supporting its competitive position.
Coinbase also reported that its prediction markets business had surpassed $200 million in annualised revenue.
The exchange posted net income of $719 million, supported by approximately $715 million in gains on cryptocurrency investments.
Adjusted net income, excluding investment gains and other items, stood at $78 million. Net revenue declined approximately 34% year over year to $1.16 billion.
The analyst downgrades coincided with renewed concerns about cryptocurrency security following the reported $6.3 billion Binance hack.
The incident has raised questions about cybersecurity across the digital asset industry, even as there are no specific indications that Coinbase or Circle are particularly vulnerable to a similar attack.
Needham warned that developments surrounding Binance had unsettled cryptocurrency markets and identified AI-driven hacking risks as a concern for the sector heading into 2027.
Binance said it had reserved more than $6.34 billion in company funds to cover losses, including $5 billion already held in the affected tokens.
The exchange is also working to recover approximately $3 billion in frozen assets.
The incident could have broader implications if it discourages cryptocurrency trading or reduces stablecoin usage.
Lower trading volumes would potentially affect Coinbase and Circle’s business activity.
Please note, this site provides content for entertainment purposes only and does not offer financial advice. Read more here