HCW downgrades Coinbase to Sell, says rally has run ahead of fundamentals

Investing.com -- HC Wainwright sharply downgraded Coinbase (NASDAQ:COIN) to Sell from Buy, saying stock’s 150% rally in last three months has outpaced fundamentals and could face pressure ahead of second-quarter results.

Despite maintaining a positive long-term view on crypto and calling Coinbase a “best of breed” exchange, analysts said the recent surge in the stock, now trading at record highs and about 56 times 2025 consensus earnings, appears overdone.

The move follows excitement around Circle’s IPO and U.S. Senate passage of stablecoin legislation, both of which investors linked to Coinbase’s role in the USD Coin ecosystem.

HCW now sees downside to Coinbase’s near-term revenue estimates, particularly in transaction income, as crypto trading volumes have declined meaningfully in the second quarter.

Coinbase’s spot volumes dropped 41% quarter-on-quarter to $232 billion, according to data cited from The Block and CCData.

The firm lowered its Q2 transaction revenue forecast by about 22% to $705 million and cut its overall revenue estimate for the quarter to $1.49 billion, well below the Street’s $1.67 billion.

It also revised down Q2 adjusted EPS to $0.72, less than half the consensus estimate of $1.50.

While subscription and services revenue is expected to outperform, helped by higher stablecoin balances and ETH price gains earlier in the quarter, HCW said that strength is unlikely to offset the softness in core trading.

For full-year 2025, the firm now sees $6.8 billion in total revenue, down from $7.4 billion previously, and lowered its earnings estimate to $4.43 per share from $5.92.

The price target was trimmed to $300 from $305, based on a 12x EV/revenue multiple.

HCW noted upside risks to the call include stronger-than-expected trading volumes or further crypto policy tailwinds in Washington.