COIN Plunges 7.35% as Nevada Lawsuit Over Prediction Markets Sparks Regulatory Fears

COIN fell to its lowest level since April 2025 on Feb. 4, with an intraday drop of 7.35%. The stock has declined 25.50% over the past 11 trading days, marking its longest consecutive losing streak on record.

The selloff follows a Nevada lawsuit against Coinbase Financial Markets alleging unlicensed wagering via its prediction markets. The state regulator seeks to block the platform’s sports event contracts, which it deems gambling under state law. This legal challenge, coupled with broader regulatory uncertainty, has amplified investor concerns. Coinbase recently expanded its prediction markets nationwide in partnership with Kalshi, a CFTC-regulated entity, but state-level actions highlight jurisdictional conflicts that could restrict operations and revenue streams.

Regulatory headwinds also intensified as Coinbase withdrew support for a U.S. crypto bill opposing stablecoin reward bans, a key revenue driver for the firm. The company’s engagement in federal policy discussions contrasts with its legal battles in Nevada and Australia, where it filed a complaint against banks for allegedly blocking crypto transactions. While these issues are less directly linked to near-term earnings, they underscore systemic challenges in securing traditional financial partnerships and navigating inconsistent regulatory frameworks.

Financial underperformance has further pressured the stock. COIN has fallen 17.67% in the past month, underperforming the S&P 500. Analysts cite worsening earnings expectations, with Q4 2025 revenue projected to decline 18.8% year-over-year. A Forward P/E ratio of 33.91—well above the industry average—reflects valuation concerns amid unresolved legal risks and a lack of clarity on crypto policy. The firm’s upcoming earnings report on Feb. 12, 2026, will be closely watched for signs of stabilization.

The broader crypto sector remains vulnerable to regulatory fragmentation, with state and federal authorities often at odds. For Coinbase, resolving Nevada’s lawsuit and securing favorable policy outcomes will be critical to restoring investor confidence. Until then, the stock’s trajectory will likely remain tied to legal developments and the pace of regulatory clarity in a rapidly evolving market.