While Coinbase is in bad shape, Goldman Sachs downgraded Coinbase stock. The American bank had advised the crypto exchange platform for its IPO in April 2021.
Times are tough for Coinbase. On Monday, US bank Goldman Sachs downgraded Coinbase (COIN) stock from “neutral” to “sell” due to the fall in the cryptocurrency market and the drop in activity of various companies in the world. sector. According to Bloomberg, Coinbase now has 20 buy, 6 hold, and 5 sell recommendations.
The U.S. bank’s decision has sent Coinbase’s stock price down 11% since Monday, trading around $51 on Wednesday. Since its Nasdaq IPO in April 2021, Coinbase’s stock has fallen 79%, facing strong market moves. As a reminder, Goldman Sachs had advised Coinbase for its IPO.
“We believe Coinbase will need to make substantial reductions in its cost base to stem the resulting cash burn as retail trading activity dries up,” Goldman Sachs analyst William wrote. Nance in a note.
The situation so far seems quite chaotic for Coinbase, which had so far benefited from the rise in cryptocurrency prices to be valued at $68 billion before its IPO. Today, its valuation has fallen to $12.4 billion.
Reduction of 18% of its employees
The American exchange platform, competitor of Binance, is struggling to withstand the shock of the volatility of cryptocurrencies. In mid-May, it published lower results for the first quarter of the year: its net income fell to 1.17 billion dollars in the first quarter, against 1.60 billion a year earlier, its total volume of transactions fell to 309 billion from 335 billion a year ago, and its number of monthly active users fell from 11.4 million to… 9.2 million.
To its mixed results were added the last two crypto-crashes, in May and June, which weakened certain cryptocurrency exchange platforms, from Crypto.com to other Latin American platforms which had to cut in their workforce.
In this context, Coinbase has not been spared. She also announced that she had to shed 18% of its workforce, or 1,100 employees, against 4,900 employees. The company wants to make sure it wants to ‘stay healthy’ during the economic downturn, its boss Brian Armstrong said in a post. It must be said that the company has “grown very quickly” as she herself admits.