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Seeking Alpha 2022-07-14 14:22:47

Coinbase stock dips as Mizuho lowers 2022 estimates on worsening market share

Coinbase (NASDAQ:COIN) shares slid as much as 4.1% in Thursday morning trading as Mizuho analyst Dan Dolev cuts his full-year estimates given the crypto exchange's continued losses in its market share. Its market share among 30 of the largest crypto global exchanges by trading volume averaged only 2.9% in July, down from 5.4% in Q1 and from a peak of 8%-9% in November 2021, "likely placing COIN outside the top 10 exchanges as measured by global volume," Dolev wrote in a note to clients. Overall, "the competitive nature of the industry is likely to require further increases in sales & marketing spend over time, and can also weigh on COIN's take rates," Dolev warned, adding that subdued volume trends will likely weigh on profitability going forward. As a result of more depressed volume trends, Dolev lowered his 2022 estimate to $3.2B compared with the consensus of $3.9B. He also reduced his price target to $42 per share vs. $45 in the prior view, implying a slump of around 20% from Wednesday's close. See why SA contributor Kolomeets Investments thinks that Coinbase (COIN) is a Sell. The Quant Rating in mid-May had also warned investors that COIN is at high risk of performing badly due to negative EPS revisions and declining growth. Earlier this month, (July 12) Coinbase CEO Brian Armstrong said his company wants to drive greater operating efficiency. 

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