By Tomi Kilgore
Coinbase’s stock has gained nearly $100 more than this analyst expected when he said two months ago that people should buy it, and it has also outperformed bitcoin by a wide margin
Shares of Coinbase Global Inc. have run up a little too much in the past couple of months, even with all the positive regulatory developments around cryptocurrency and with bitcoin’s rally – so if you own the shares, it’s time to book some profits, Monness Crespi Hardt’s Gus Gala recommended.
Gala lowered his rating on the cryptocurrency exchange’s stock (COIN) to neutral from buy, and he no longer has a price target. The downgrade comes just days before the company reports second-quarter results after the July 31 close.
“Potentially early, but we think it is time to take profit here,” Gala wrote in a note to clients.
The stock shed 3% in midday trading. It has now pulled back 9.5% amid a six-day losing streak, which started after the stock closed at a record $419.78 on July 18.
Coinbase has had a fantastic couple of months. The stock got picked to join the S&P 500 index SPX, the company launched a stablecoin payments platform in the midst of a stablecoin frenzy, and bitcoin (BTCUSD) powered to record highs as “crypto week” earlier in July ended with President Donald Trump signing the Genius Act – which is aimed at regulating stablecoins – into law.
Kudos to Gala. He had upgraded the stock to buy and set a $300 price target after it closed at $207.22 on May 12. It took six weeks for the stock to surpass his target, as it closed at $308.38 on June 20. The stock closed Friday 89% above where it was when he upgraded it, while bitcoin prices gained about 14% over the same period.
Correlation between Coinbase’s stock and bitcoin has been 0.89 over the past two years – a reading of 1.00 would mean they moved exactly in sync – but has dipped to 0.80 since Gala’s upgrade in May.
Gala said he would “be interested in revisiting” the stock at a lower valuation once the hype around crypto and the stock settles. How investors react to earnings could provide some insight into the timing.
Keep in mind that the stock has declined on the day after the release of the company’s last five earnings reports. The declines ranged from 2.4% on May 3, 2024, to 15.3% on Oct. 31, 2024, with an average decline of 6.6%.
Analysts surveyed by FactSet expect second-quarter earnings per share to rise to $1.33, up from 14 cents in the same period a year ago, and revenue to rise 10.4% to $1.6 billion.
Total trading volume is expected to grow by 5.6% to $238.6 billion, after climbing 26% to $393 billion in the first quarter and after soaring 185% to $439 billion in the fourth quarter.
Getting current valuations to match continued improvements in investor sentiment toward the stock will require changes in “real world” volumes and an acceleration in crypto trading volumes, Gala said.
Basically, that’s “too much of a blue sky scenario” for him to remain bullish on the stock at current prices, he said.
-Tomi Kilgore
This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
07-28-25 1243ET
Copyright (c) 2025 Dow Jones & Company, Inc.