Coinbase Stock Downgraded Ahead of Q1 Earnings

Coinbase Global (COIN) stock has been downgraded by Monness, Crespi, Hardt & Co. analyst Gus Galá ahead of the company's first-quarter financial results, scheduled for May 8. The downgrade comes as Galá expressed concerns that Coinbase might issue disappointing first-quarter results. Consequently, Galá changed his rating on COIN stock from Buy to neutral and removed his $275 price target on the shares.

In a research note to clients, Galá described the downgrade as a “tactical move” ahead of earnings. He expects an earnings miss or downwardly revised guidance from Coinbase, which could negatively impact the share price and present a better buying opportunity. Despite being down 21% for the year, COIN stock has risen 25% in the past month after hitting a 52-week low in early April.

As a leading crypto exchange, Coinbase generates revenue primarily through transaction fees. However, many investors have moved to the sidelines and are holding cash due to persistent market volatility. This situation increases the likelihood that Coinbase’s Q1 results will fall short of Wall Street analysts' and Main Street investors' expectations.

Additionally, the regulatory environment for cryptocurrencies in the U.S. remains uncertain. While U.S. President Donald Trump promised crypto-friendly policies and favorable regulation during his campaign, efforts to establish the U.S. as the “crypto capital of the planet” have faced legislative challenges in Congress, according to Galá.

Despite the downgrade, Coinbase Global stock maintains a consensus Moderate Buy rating among 22 Wall Street analysts. This rating is based on 12 Buy, nine Hold, and one Sell recommendations assigned in the last three months. The average COIN price target of $271.05 suggests a potential 37.59% upside from current levels, according to the analyst's forecast.