JPMorgan Raises Red Flag on Coinbase Earnings, Slashes Price Target by 27%
JPMorgan Raises Red Flag on Coinbase Earnings, Slashes Price Target by 27%
Global investment bank JP Morgan has issued a cold warning about deteriorating profitability at cryptocurrency exchanges, sharply lowering its price target for Coinbase ahead of the company’s earnings release.
According to crypto media outlet CoinGape on February 11 (local time), JP Morgan analyst Kenneth Worthington cut Coinbase’s price target by about 27%, from $399 to $290. While citing an increasingly unfavorable operating environment for the crypto market as the key reason for the adjustment, Worthington maintained his Overweight rating on the stock.
JP Morgan expects weakening prices of major assets including Bitcoin (BTC) and declining staking yields to directly weigh on Coinbase’s profitability. Worthington modeled subscription and services revenue at around $670 million, below the company’s original guidance range of $710 million to $790 million, presenting a conservative outlook.
Slowing growth of the stablecoin USDC and falling reserve yields were also identified as negative factors for Coinbase’s performance. However, JP Morgan noted that revenue generated through the recently acquired crypto derivatives exchange Deribit could partially offset the overall revenue decline and help cushion the downturn.
Worthington warned that reduced retail trading volumes and a contraction in total crypto market capitalization would likely lead to a meaningful drop in fourth-quarter earnings per share. This suggests that the anticipated influx of institutional capital following the launch of spot crypto ETFs has been translating into actual exchange fee revenue more slowly than the market expected.
The downgrade reflects growing market skepticism about Coinbase’s financial health ahead of its earnings report. How successfully the company reduces its reliance on transaction fees through new revenue streams such as Deribit will likely serve as a key indicator determining the direction of any future stock rebound.
Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses incurred based on it. The content should be interpreted for informational purposes only.
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