Cowen downgrades Coinbase as crypto firms come under scrutiny after FTX implosion

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It’s time to take a break on Coinbase shares as the company faces potential scrutiny following the FTX boom and falling retail trading volumes, Cowen said. Analyst Stephen Glagola downgraded shares of the cryptocurrency exchange operator to lift market performance from outperformance, citing a tough macro backdrop and FTX-fueled crypto troubles unlikely to ease short term. “There is low visibility by stabilizing retail transaction volumes in 2023 after further deterioration in December,” he wrote. “Potential SEC enforcement action is high after FTX with regulatory certainty unlikely through 2024.” Coinbase shares have fallen 86% in 2022, falling 34% alone since FTX filed for bankruptcy in November. This is in part due to the stock’s high correlation to crypto asset prices, which have fallen significantly. A steady decline in trading volumes that began more than a year ago is another factor weighing on shares, with Glagola expecting another round of layoffs this year to help cut costs. Along with the downgrade, Glagola lowered 2023 revenue and adjusted EBITDA estimates below consensus expectations and cut its share price target to $36 from $75 per share. The price drop suggests a drop of more than 4% from Wednesday’s close. The shares fell slightly before the bell. CNBC’s Michael Bloom contributed reporting

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