Goldman Sachs cuts Coinbase price target and downgrades it to ‘sell’

Goldman Sachs reduced Coinbase’s price target from $75 to $40 and cut its rating to “sell” from “neutral” as the crypto market experiences a severe rout.

In a report today, the banking giant cited falling cryptocurrency prices and lower industry activity for the downgrade.

“We believe current crypto asset levels and trading volumes imply further degradation in COIN’s revenue base,” analyst Will Nance said, and sees revenue dropping around 61% year-on-year in 2022. 

Shares of Coinbase dropped 7.41% on Monday to $58.07 following the report and are down about 77% for the year as the “crypto winter” keeps hurting the biggest crypto exchange in the US.

Coinbase cut 18% of its workforce earlier this month to manage costs after admitting that it hired too many people and needed to stay healthy as it warned of a recession. Goldman Sachs said further cuts will be needed.

“We believe Coinbase will need to make substantial reductions in its cost base in order to stem the resulting cash burn as retail trading activity dries up,” the bank wrote.

The crypto industry has seen a tumultuous 2022 that has seen prices of major cryptocurrencies plummet and dragged the crypto market cap below $1 trillion from a peak of about $3 trillion last year.