Coinbase Global (NASDAQ:COIN)
As a result of the ongoing cryptocurrency collapse, Wells Fargo analyst Jeff Cantwell started his crypto-related coverage on Thursday by giving an Underweight rating to Coinbase stock and Equal Weight ratings to Riot Blockchain (NASDAQ:RIOT) and Bakkt (NYSE:BKKT).
Coinbase stock, RIOT (-3.1%), and BKKT (-1.3%) fell premarket as stock index futures pointed to a weaker start, but bitcoin (BTC-USD), +0.8%, and other key digital tokens attracted a bid.
Cantwell warned customers in a memo that increased competition from other notable exchanges like Binance and FTX will cut into the market share of Coinbase Global (NASDAQ:COIN), the leading crypto exchange in the United States by trading volume.
The equities analyst warned that Coinbase’s stock advantages as an early adopter would dwindle as its rivals began to “copy” its environment.
Cantwell said that Coinbase Global’s (NASDAQ:COIN) revenue growth and margins would suffer as a result of downward pressure on retail pricing due to Binance’s recent decision to abolish trading fees for bitcoin (BTC-USD) and Ethereum (ETH-USD).
Check out Serge d’Adesky’s justification for a Hold recommendation on COIN (here on SA).
Cantwell predicts that the “lingering consequences from ‘crypto winter’ and a worse macro environment going ahead will weigh heavily on the price of Bitcoin,” which will have a negative effect on Riot Blockchain’s (RIOT) sales and earnings per share growth.
However, Cantwell said in a separate note that Riot is in a “fairly decent position to weather the present” industry dip since its marginal cost of manufacturing BTC remained positive at $10k-12k while the token changed hands for $19.2k at the time of writing.
Cantwell’s Equal Weight rating is in line with Quant’s Hold recommendation but differs from the Strong Buy of Coinbase stock typical Wall Street rating.
Digital asset exchange Bakkt (BKKT) has “major hurdles for investors to be pondering at this stage in the cycle given the worsening macro environment and potential of a protracted crypto winter,” Cantwell said in another note.
On the other hand, Cantwell believes Bakkt (BKKT) is set up for sustained expansion because of the company’s “scale, with varied income streams and competitive advantages.”
Wells Fargo has assigned an underweight rating to the Coinbase stock, whereas Riot and Bakkt began with an equal weight rating.
Featured Image – Megapixl © Burdun