Baird has issued a new rating for Coinbase Global, categorizing the stock as a Bearish Fresh Pick. The research firm has expressed concerns that weak trading volumes may lead to disappointing revenue figures for the second quarter, while also highlighting that the current high valuation of the stock makes it susceptible to a significant downward adjustment.
Analyst David Koning conveyed to investors that the firm anticipates a revenue miss of approximately 5% to 6% against street estimates, with projections indicating a sequential decline in volume growth of 15% to 20%. He remarked on the especially slow trading environment in April and May, which were noted as two of the weakest months in recent years. Koning referenced comments from Robinhood’s chief brokerage officer, who highlighted resilience in equities and options but notably omitted any mention of cryptocurrency activity.
Despite some improvements in trading volumes in early June, Baird cautioned that this uptick may not indicate a robust recovery in the market but could instead be attributed to heavy selling of bitcoin. The firm suggested that this selling trend might lead to continued limited interest in crypto trading moving forward.
On the legislative front, Baird expressed skepticism regarding the passage of the CLARITY Act, a significant regulatory framework intended for the cryptocurrency sector. The firm indicated that the bill is unlikely to gain traction before the upcoming November midterm elections, primarily due to ongoing legislative gridlock concerning ethics and crypto issuance issues. This stalling could further intensify competition from banks and fintech companies that operate within an existing regulatory landscape.
Regarding valuation, Koning pointed out that Coinbase is currently trading at around 35 times the estimated earnings per share (EPS) for 2027, a valuation that he believes is increasingly at risk. He warned that a combination of decreasing revenue estimates and lower multiples across broader fintech sectors could impact Coinbase’s valuation negatively. In a bear scenario, Baird forecasts that the stock price could drop to a range of $75 to $90, assuming that the 2027 EPS declines to $3 and the valuation multiple compresses to between 25 and 30 times earnings.
In light of these findings, Baird has revised its price target for Coinbase from $160 to $142. The firm’s Bearish Fresh Pick rating is set to expire on June 27.
