Cowen Downgrades Coinbase Stock, Citing Trading Volume Declines

Cryptocurrency exchange Coinbase (COIN) shares were downgraded to market perform from outperform by investment firm Cowen, which cited the lack of clarity on a possible recovery in trading volumes following the collapse of rival exchange FTX.

Cowen also cut its price target on the shares to $36 from $75. The stock was down 1.5% to $37.14 in premarket trading. It fell 84% in 2022.

The fallout from the collapse of Sam Bankman-Fried's exchange FTX will potentially result in sterner scrutiny from the U.S. Securities and Exchange Commission, while depressed crypto valuations will cause muted retail trading activity.

"COIN's business is significantly correlated to crypto asset prices, trading volumes and volatility," analysts Stephen Glagola and George Kuhle wrote in a note.

"COIN's monthly trading volumes have seen a fairly consistent drawdown each subsequent month since November 2021, and there remains low visibility into either a stabilization or rebound in retail trading volumes over 2023 given the macro backdrop and FTX contagion risks on crypto asset prices," they said.

Read more: Cathie Wood Buys More Coinbase Shares on the Cheap