On Thursday, Tiger Securities adjusted their stance on Coinbase Global Inc. (NASDAQ: NASDAQ:COIN), downgrading the cryptocurrency exchange's stock from Buy to Hold. Trading at $330, with a remarkable 90% gain year-to-date, the stock's reassessment comes after a significant increase in the price of Bitcoin (BTC), which recently hit the $100,000 mark.
The firm's analyst cited the change in the risk-reward profile for Coinbase as the primary reason for the downgrade. With Bitcoin's value reaching such a high level, the potential for growth has become less attractive compared to the risks now associated with investing in the company.
According to InvestingPro data, the stock's beta of 3.58 indicates significantly higher volatility than the broader market, while current analysis suggests the stock may be overvalued at these levels. The analyst noted that while there is still an expectation for Bitcoin to reach between $120,000 and $130,000, the increased downside risks at the current price point warrant a more conservative approach.
Previously in late October, when Bitcoin was trading below $70,000, Tiger Securities had predicted a 70% chance of the cryptocurrency reaching $100,000 by the second half of 2025. This forecast has since come to fruition much earlier than anticipated, prompting the firm to revisit its recommendations for Coinbase.
The downgrade reflects a shift in strategy in response to the recent price surge of Bitcoin. The analyst emphasized the importance of prudence given the current market conditions, suggesting that investors take a cautious stance at this juncture.
For deeper insights into Coinbase's valuation and 13 additional key ProTips, investors can access comprehensive analysis through InvestingPro, which offers detailed financial health scores and expert research reports.
Coinbase, as a major player in the cryptocurrency exchange market, is closely tied to the fluctuations of Bitcoin and other digital assets. The adjustment in rating by Tiger Securities is a direct response to the rapid changes observed in the cryptocurrency market, particularly the milestone achievement of Bitcoin's value.
In other recent news, Bitcoin's surge past $100,000 has sparked significant gains for various companies with exposure to cryptocurrency, including Coinbase. The digital currency's value increase is attributed to President-elect Donald Trump's appointment of Paul Atkins as the new Chair of the Securities and Exchange Commission (SEC), signaling a supportive stance towards cryptocurrencies. Companies such as Riot Platforms (NASDAQ:RIOT), MARA Holdings, and Bit Digital have seen their shares rise, with Coinbase experiencing a 4.5% gain.
Additionally, investment firm Oppenheimer has raised its price target for Coinbase from $265 to $358, maintaining an Outperform rating. This adjustment follows recent political developments perceived as favorable for the cryptocurrency industry. Lucid (NASDAQ:LCID) Capital Markets also initiated coverage on CION Investment Corporation with a Buy rating, setting a price target of $13.50.
However, H.C. Wainwright adjusted its price target for Coinbase, reducing it to $255 from the previous $265, while maintaining a Buy rating. This change follows Coinbase's reported revenue shortfall for the third quarter of 2024. Nevertheless, Monness, Crespi, Hardt maintained a Buy rating on Coinbase, noting the company's strategic positioning within the cryptocurrency sector despite recent challenges.
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