Coinbase (COIN) faced a downgrade from analysts at Compass Point, who questioned the sustainability of its current valuation.
Compass Point lowered its rating on Coinbase from Neutral to Sell and cut the price target from $330 to $248 per share — representing a 21% drop from Friday’s closing price.
“While we remain constructive on the current crypto cycle, we expect a choppy 3Q alongside weak August/September seasonality and waning retail interest in crypto treasury stocks,” Compass Point analyst Ed Engel wrote Sunday night. “As such, we see limited support for COIN’s valuation if crypto markets sell off further.”
The downgrade follows Coinbase’s stock plunge of 14% on Friday — its largest single-day drop since April — after the company reported that quarterly revenue was negatively impacted by lower trading volumes.
Compass Point highlighted Coinbase’s Subscription & Services (S&S) revenue, which came in at $655.8 million, falling short of Wall Street’s estimate of $715.2 million. This segment includes offerings such as Coinbase One, a monthly subscription service that provides no trading fees and other benefits.
“Investors place a higher premium on these recurring fees, thus disappointing S&S fees have a more pronounced impact on COIN’s valuation,” Engel noted.
Additionally, Engel pointed to increasing competition in the stablecoin market as a factor likely to pressure valuations for both Coinbase and its partner Circle (CRCL), the issuer of U.S. dollar-backed digital tokens that shares some interest income revenue with Coinbase.
The analyst team also believes that interest in crypto treasury stocks—like MicroStrategy (MSTR), the largest public holder of Bitcoin—is fading. This reduces these companies’ ability to raise capital for additional token purchases, limiting near-term upside for crypto.
“Strategy has recently slowed purchases of bitcoin,” Engel added. “With Strategy buying $18bn BTC YTD, MSTR’s pivot removes another layer of BTC buying pressure.”
Despite Compass Point’s bearish stance, not all analysts share the same view. According to Bloomberg data, Coinbase currently holds 19 Buy ratings, 16 Hold, and 5 Sell recommendations.
Bernstein analysts recently described Coinbase as a “one-stop Amazon” for crypto services. In a note last week, they reaffirmed their Outperform rating and set a $510 price target.
They advised investors to focus on Coinbase’s crypto derivatives business and its vision to become an “everything exchange.” On a recent earnings call, CEO Brian Armstrong emphasized the company’s push into tokenized equities—digital tokens representing real-world stocks.
“We believe tokenized equities are more efficient with global coverage, 24/7 trading, instant settlement, and the ability to offer perpetual futures,” Armstrong said.
Year to date, Coinbase shares have risen roughly 24%.
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