Shares of Coinbase (COIN) plunged more than 20% before the market opened after the crypto exchange reported lower-than-estimated revenue and weaker trading volume for the first quarter. The stock has lost more than 70% this year.
Several Wall Street analysts, while seeing Coinbase as a leader in the overall crypto industry, say headwinds remain, and many lowered their price targets early Wednesday.
"We continue to recommend Coinbase as we see it as a leader in the crypto ecosystem, but we recognize that crypto needs a catalyst and the risk of owning Coinbase stock continues to increase as positive returns are pushed further into the future," Kenneth Worthington, an equity research analyst at JPMorgan, said in a note to clients. The bank lowered its price target to $171 from $258 and continued to recommend an overweight rating on the shares.
Coinbase said in an after-hours earnings release Tuesday that it expects the second quarter to be weaker than the first quarter in terms of monthly transaction numbers and overall trading volume.
Some analysts see an opportunity in the battered crypto exchange's shares, pointing to the potential for long-term growth.
Coinbase is trading as if the company will use up all its cash and then become insolvent," Mark Palmer, equity research analyst at BTIG, said in a note. Eventually, investors will see an opportunity in the shares, he said, calling the stock decline "highly exaggerated." BTIG maintained its buy rating and lowered its price target to $380 from $500.
Coinbase said it remains focused on investing while acknowledging choppy market conditions.
"We believe these market conditions are not here to stay, and we remain focused on the long term," the company said in the earnings release. "In fact, our investments in our business are particularly critical now - these periods of low volatility can provide an opportunity to focus more intensely on product development (as opposed to peak periods when we focus more on meeting high demand). We approach the opportunities ahead with confidence and a steady hand."