Coinbase stumbles to its lowest price since going public as the crypto market sells off

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  • Coinbase shares on Monday hit their lowest level since making their public trading debut in April.
  • The stock fell as much as 8% on Monday as a sell-off in bitcoin led to weakness across assorted cryptocurrencies.
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Coinbase shares on Monday fell to their lowest price since the cryptocurrency exchange began trading last month, under pressure as bitcoin and other cryptocurrencies heavily sold off.

Risk aversion appeared to hit the crypto market broadly as bitcoin slumped to a February low and other stocks exposed to bitcoin lost ground. Losses for bitcoin and other cryptocurrencies pulled the valuation of the global cryptocurrencies market down by much as $50 billion during Monday’s session, according to CoinMarketCap.

Coinbase shares fell as much as 8%, to $238.25, marking the first time they had dropped below the reference price of $250 set before the stock’s public-market debut in April. Actual trading opened at $381 on April 14.

Coinbase’s stock has largely pulled back since they surged to $429.54 in their first day of trading. Their arrival marked the first cryptocurrency exchange to go public. Bitcoin was also in the spotlight on that day as it hit a record above $64,000.

But bitcoin on Monday sank below $43,000 after Tesla CEO Elon Musk suggested the electric car maker might – or had sold – its holdings in the cryptocurrency. Bitcoin pared its loss after Musk clarified that Tesla still held its bitcoin stake. However, bitcoin’s price still suffered as did those of other cryptocurrencies including a 6% decline in Ether, the token of the Ethereum blockchain, lost 5%, Cardano-ADA fell 10%, and Dogecoin shed about 4%.

The value of the global cryptocurrency market lost as much as 23% over the past five days since reaching its most recent market-cap high of $2.56 trillion.

Coinbase last week reported first-quarter adjusted earnings of $3.05 per on revenue of $1.8 billion that met expectations. Coinbase did say it planned to start offering dogecoin for trading in six to eight weeks.

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Coinbase slips to lowest point since its debut as bitcoin plunges below $50,000

coinbase direct listing
People watch as the logo for Coinbase Global Inc, the biggest U.S. cryptocurrency exchange, is displayed on the Nasdaq MarketSite jumbotron at Times Square in New York, U.S., April 14, 2021.

  • Coinbase slid to a record low Friday, extending losses for a fifth day in a row amid a plunge in bitcoin’s price.
  • The cryptocurrency exchange fell 3.87% to as low as $282.07, about a 14% drop from its first day of trading last week.
  • Mizuho initiated coverage of Coinbase with a “neutral” rating and price target of $285.
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Coinbase slid to a record low Friday morning, extending losses for a fifth day in a row amid a plunge in bitcoin’s price.

The cryptocurrency exchange fell 3.87% to as low as $282.07, about a 14% drop from the price on the close of its first day of trading on public markets last week.

Meanwhile, Bitcoin slid below $50,000 on Friday, and simultaneous drops in other digital currencies erased $260 billion off the total value of the cryptocurrency market.

Coinbase’s stock is heavily tied to bitcoin’s price and a “perfect storm” of recent news is likely dragging down both the cryptocurrency and the exchange, said Dan Dolev, Mizuho Securities Senior Analyst, FinTech Equity Research.

The analyst noted that President Biden’s plan for the US to achieve net-zero emissions in the next few decades is likely weighing on bitcoin’s price given the environmental concerns with mining the coin. And, more countries are tightening regulation, including Turkey’s central bank, which is banning the use of cryptocurrencies.

Dolev and Mizuho Associate Ryan Coyne initiated coverage of Coinbase on Wednesday with a price target of $285 and a “neutral rating.”

Dolev told Insider Friday morning that he didn’t anticipate the stock to slide near his price target so quickly. When he initiated coverage on Wednesday, Coinbase was hovering around $320 a share.

Over 80% of Coinbase’s total revenue is reliant on retail transaction fees, and that could pose a risk for Coinbase down the road if other competitors like PayPal and Cash App, whose profits rely less on transaction fees, move to zero-commission trading, Dolev and Coyne said in their Coinbase note.

The analysts conducted a survey of nearly 400 individuals that use either Cash App, Venmo, PayPal, Coinbase, Robinhood, or Chime or some combination of these services in November 2020. The survey found that 55% of Bitcoin traders across Coinbase, PayPal, and Cash App consider low transaction fees as the second most important quality of crypto trading app platforms, right behind security.

In a phone call with Insider Friday morning, Dolev said: “They’ve done a great job, but that reliance on the retail trading fee is a real concern because we know how it ended when it comes to equity commissions.”

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