Coinbase Downgraded to Sell on Weaker Earnings and Crypto Cooling

Coinbase Global (NASDAQ:COIN) has recently been downgraded to “Sell” by Compass Point Research, marking a significant shift in investor sentiment toward the cryptocurrency exchange [1]. The downgrade comes amid a broader cooling of retail interest in crypto equities and increased competition in the stablecoin sector. Compass Point also cut its price target for Coinbase from $330 to $248 per share, reflecting concerns over the firm’s earnings outlook and valuation [2].

The downgrade followed Coinbase’s weaker-than-expected second-quarter earnings report, which saw a 39% sequential drop in transaction revenue to $764 million [1]. Additionally, the company’s subscription and services segment, which had been a key area of growth, also declined by 6% quarter-over-quarter to $656 million. These results signaled a slowdown in both the core and diversified parts of Coinbase’s business [2].

Analysts noted that while Coinbase’s retail trading business faces disruption from decentralized exchanges and exchange-traded funds, the drop in recurring revenue was more concerning for investors who value stable, predictable income streams [1]. Compass Point also pointed to the emergence of new crypto treasury firms and the narrowing premium they trade at relative to their holdings as signs that enthusiasm for crypto-related equities is waning [2].

Despite the recent earnings dip, Coinbase’s stock has risen 28% year-to-date and trades around $319 as of Monday. However, the stock has lost 15.5% of its value since the earnings report last week. The firm’s market cap has also been affected by concerns over its valuation, with Compass Point arguing that the stock offers limited upside if the broader crypto market continues to weaken [2].

The analysts further highlighted the competitive pressure from traditional financial institutions, such as Bank of America, which are now entering the stablecoin space. As more firms introduce their own stablecoin products, Coinbase and Circle—which recently saw its own downgrade—may struggle to maintain their market positions [1]. Circle’s stablecoin, USDC, could see its market share eroded if new entrants gain traction, even as the token’s overall market cap continues to grow [2].

While the downgrade does not suggest an immediate collapse of Coinbase’s business model, it does indicate a recalibration of expectations in the face of macroeconomic uncertainty and regulatory scrutiny. Investors are advised to monitor the broader crypto market and Coinbase’s financial performance closely, as any significant shift in demand could impact the stock’s future trajectory [2].

[1] Sell Coinbase as crypto stock's rally runs out of steam. (2025, August 4). CNBC. https://www.cnbc.com/2025/08/04/sell-coinbase-as-crypto-stocks-rally-runs-out-of-steam-says-compass-point.html

[2] Compass Point downgrades Coinbase on valuation, weak earnings outlook. (2025, July 28). Investing.com. https://ng.investing.com/news/stock-market-news/compass-point-downgrades-coinbase-on-valuation-weak-earnings-outlook-2041247

[3] Coinbase was downgraded by Compass Point analysts to a Sell as bitcoin enters a seasonally weak period and retail investor appetite for crypto treasuries wanes. (2025, August 4). Yahoo. https://www.yahoo.com/news/articles/homeowners-legal-action-hoas-sudden-111546945.html