Coinbase Under Pressure: Analyst Downgrades and CEO's Stock Sales Spark Market Jitters
Analyst Anticipates Revenue and EBITDA Shortfall for Coinbase
H.C. Wainwright's latest assessment projects a notable dip in Coinbase's net revenue and adjusted EBITDA. This revised outlook is primarily attributed to the subdued performance of the cryptocurrency market and decreased trading volumes observed throughout the quarter. Investors are cautioned to brace for potential underperformance in the upcoming earnings report.
The Impact of Unrealized Crypto Losses and Circle Stake
The analyst's report highlights that Coinbase might declare a substantial earnings per share (EPS) loss. This expected loss is linked to unrealized depreciation in its cryptocurrency holdings and a reported 40% quarter-over-quarter decline in the value of its investment in Circle, a stablecoin issuer.
First Quarter Guidance: Subscriptions and Services Revenue Below Expectations
Forecasts for Coinbase's Subscription and Services revenue in the first quarter of 2026 suggest figures below market consensus. This downward revision is influenced by the continued softness in digital asset prices and a reduction in USDC's market capitalization, with H.C. Wainwright estimating this segment's revenue at $756 million.
Near-Term Share Price Volatility Expected Post-Earnings
Investors are advised to anticipate potential downward pressure on Coinbase's stock price immediately following the earnings release. The analyst's note suggests that a significant reported net loss, combined with the prevailing negative sentiment in the crypto market, could trigger a sell-off.
Coinbase CEO's Extensive Stock Divestment
Adding to the market's apprehension are reports detailing Coinbase CEO Brian Armstrong's substantial sale of company stock. Over the past nine months, Armstrong has divested approximately $545.7 million worth of shares, primarily to diversify his portfolio and fund new ventures.
Armstrong Addresses Stock Sales, Reaffirms Long-Term Commitment
In response to the circulating reports, Brian Armstrong clarified that his stock sales are a strategic move for portfolio diversification, stating that maintaining almost his entire net worth in a single stock would be imprudent. Despite these sales, he emphasized his continued strong belief in Coinbase's future, with the majority of his wealth still invested in the company.
Revised Price Target and Bullish Long-Term Outlook
Despite the immediate challenges, H.C. Wainwright has adjusted Coinbase's price target to $350, down from $425, while maintaining a "Buy" rating. This new target represents a significant potential upside of over 128% from current trading levels. The analyst remains optimistic about Coinbase's long-term prospects, advocating for buying into any post-earnings weakness.
Catalysts for Future Growth: Regulatory Clarity and Market Structure Legislation
The long-term bullish stance is supported by potential positive catalysts, particularly advancements in crypto market structure legislation. Such regulatory clarity could foster a more stable environment, supporting the exchange's sustained growth. However, recent remarks from Treasury Secretary Scott Bessent, indirectly criticizing Coinbase for hindering legislative progress, add a layer of complexity to this outlook.