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Coinbase stock forecast: Will it survive the crypto winter?


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Will COIN survive crypto winter? Source: Iryna Budanova, Shutterstock

The share price for US-based cryptocurrency exchange Coinbase (COIN) retreated after the company missed analyst estimates for the second quarter and reported a $1bn loss due to a downturn in cryptocurrency trading. 

Coinbase reported a net loss in the first half of the year after turning a profit in 2021, as users turned away from collapsing cryptocurrency markets and the platform’s trading volume fell.

Yet, the COIN stock price still trades 60% higher than in early May and 90% higher than June’s low amid positivity in sentiment following the BlackRock partnership announcement.

The stock had plunged 65.07% year to date, as of 9 August, and 74.36% since Coinbase went public during the crypto market rally in April 2021.

Can the stock claw back its value, and what is the latest Coinbase stock forecast? Here we take a look at what factors shape the crypto exchange’s share price predictions in the current market environment. 

Coinbase stock follows crypto markets lower

Coinbase went public on the Nasdaq Stock Exchange in April last year, and initially traded above the early indicated price range at around $100, closing at $342 in the first session. 

The COIN stock price dropped to $224.35 a share in late May, coinciding with a cryptocurrency markets selling off, and then continued to follow the price trend, climbing to its peak of $368.90 in November when bitcoin (BTC) climbed to its all-time high.

The stock started 2022 at the $251 level, and continued to trend lower, closing at $103.74 on 6 May. The price then plummeted to $53.72 on 11 May, the day after the company announced weaker than expected first-quarter earnings. 

The move also coincided with the collapse of the Terra Luna cryptocurrency ecosystem that prompted a broad cryptocurrency sell-off.

The share price moved up to $78.10 on 31 May, but again pulled back, dropping to $47.02 by the end of June. The price rebounded to $75.27 on 20 July, before retreating to $52.93 on 26 July and then rallying to $98.02 on 8 August, more than doubling the share price from the June low. The stock then dropped back to close at $87.68 on 9 August, shedding more than 10% in the session.

Coinbase stock price, 2021 - 2022

Coinbase’s second quarter net revenue totalled $803m, down from $1.17bn in the previous quarter and $2.03bn in the second quarter of 2021.

Subscription and services revenue totalled $147.4m, down from $151.9m in the first quarter but up from $102.6m a year earlier. 

Coinbase had 9.0m monthly transacting users in the second quarter, down from 9.2m in the second quarter but up from 8.8m in the second quarter of 2021.

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An impairment charge on the cryptocurrency on the company’s books pulled down its adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) to a loss of $151m, from earnings of $1.12bn a year earlier. 

Net loss for the quarter totalled $1.09bn, up from a loss of $430m in the first quarter and compared with a net profit of $1.61bn in the second quarter of 2021.

Coinbase noted that the total cryptocurrency market capitalisation declined by $1.3trn, around 60%, in the second quarter, “primarily driven by macroeconomic conditions and shocks to the crypto credit environment.”

What does that indicate for the Coinbase projected stock price in the coming years? The company noted in its shareholder letter that the cryptocurrency markets are cyclical. 

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“We have observed four major crypto asset price cycles since 2010. Each prior cycle has lasted anywhere from two to four years and resulted in the crypto market capitalization significantly increasing compared to the preceding cycle. Each prior cycle brought in new market participants, developers, and products that further advanced the crypto economy,” the company said.
“Down markets are not as bad as they may seem. Yes, it can feel scary and near-term financials can be heavily impacted. That’s why we have worked hard to build a strong balance sheet to weather the storms,” Coinbase added.

Coinbase stock forecast: Is the crypto exchange buy, sell or hold?

The average price target from 23 analysts who have issued a 12-month Coinbase stock forecast was $162.10, according to data compiled by MarketBeat, as of 10 August, with estimates ranging widely from a low of $42 to a high of $455. There were 16 ‘buy’ ratings, five ‘hold’ and two ‘sell’ recommendations.

Following the strong rally in the COIN price in July and ahead of the second-quarter earnings report, analysts Carlton Lai and Steven Nie at Daiwa Capital Markets on 5 August slashed their Coinbase stock forecast from $200 a share to $100.

“Our long-term thesis on the sector and the company has not materially changed, but we acknowledge that the greater-than-expected drop in trading volumes and heightened competition with major exchanges have sharply reduced the revenue visibility of the company,” the analysts wrote in a Coinbase stock analysis for clients.
“In terms of positives, we believe Coinbase’s partnership with BlackRock’s Aladdin platform is a major win for the company, as it demonstrates institutional interest in crypto assets remains strong while it is also a testament of the quality of Coinbase’s platform as well as its regulatory compliance, in our opinion.”

On the same day as the Daiwa target price cut, analysts at Citigroup lowered their Coinbase stock price prediction from $115 to $105, according to MarketBeat. And on 10 August, analysts at Keefe, Bruyette & Woods downgraded the stock from ‘market perform’ to ‘underperform’, with a Coinbase stock price target of $45 a share.

Algorithm-based forecasting website Wallet Investor was bearish in its Coinbase stock forecast for 2022 at the time of writing, predicting that the share price would drop to $10.343 in December and $0.000000000001 by May 2023, raising questions about the stock’s future.

By contrast, Panda Forecast had a Coinbase stock forecast for 2025 of $109.29 by the end of the year, up from the $95.24 Coinbase share price forecast for the end of 2022.

If you are looking for a Coinbase stock price prediction, we recommend that you always do your own research. Look at the latest news, technical and fundamental analysis, and expert opinion before making any trading decisions. 

Note that analyst and algorithm-based Coinbase stock predictions can be wrong. COIN stock forecasts shouldn’t be used as a substitute to your own research. Remember, past performance is no guarantee of future returns. And never trade money that you cannot afford to lose.

FAQs

Is Coinbase a good stock to buy?

The Coinbase stock price is closely tied to cryptocurrency markets, which are high risk, highly volatile assets. Whether Coinbase is a good fit for your portfolio will depend on your risk tolerance and investing strategy.

Note that analyst and algorithm-based Coinbase stock predictions can be wrong. COIN stock forecasts shouldn’t be used as a substitute to your own research. Remember, past performance is no guarantee of future returns. And never trade money that you cannot afford to lose.

Will Coinbase stock go up?

The COIN share price movement will depend largely on the direction of the cryptocurrency markets, as well as Coinbase’s financial performance. It’s important to do your own research to take an informed view of the share price.

Should I invest in Coinbase stock?

Whether you should invest in Coinbase stock is a decision that only you can make based on your own personal circumstances and investing goals. Past performance is no guarantee of future returns. And never invest money that you cannot afford to lose.

Further reading:

 

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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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