Coinbase Global (COIN) stock slipped more than 3% on Monday morning after Monness Crespi analyst Gustavo Gala downgraded the stock to Hold from Buy. He pointed to valuation concerns and said COIN needs clearer growth drivers beyond recent crypto milestones. The rating downgrade comes just ahead of its second-quarter earnings, due for release on July 31.
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Currently, analysts expect COIN to post revenue of $1.63 billion in Q2, up from $1.43 billion in the year-ago quarter. Further, the company is expected to report earnings of $1.38 per share, compared with earnings of $0.14 in the prior-year quarter.
Valuation Too Expensive
Gala believes COIN is trading at a rich valuation and would only consider buying again around $275. He assumes COIN will maintain similar earnings in the second half of 2025 and a valuation multiple in the high teens, comparable to traditional exchanges.
The rating cut comes despite positive crypto developments, such as the GENIUS Act, Circle’s IPO, and the proposed CLARITY Act. In fact, Gala wants to see actual revenue and volume growth driven by real-world use cases. Also, he is not convinced that the recent Shopify (SHOP) partnership or regulatory progress are enough to justify a premium valuation.
Further, the analyst noted that Coinbase’s Layer 2 blockchain, Base, could boost real-world use, but Gala says its transaction volume is still low.
Lastly, he warned against relying too much on positive sentiment or speculative optimism. For him to get bullish again, he expects solid growth in crypto trading volumes or real-world usage.
Is Coinbase a Good Stock to Buy?
Turning to Wall Street, COIN stock has a Moderate Buy consensus rating based on 13 Buys, 12 Holds, and one Sell assigned in the last three months. At $344.33, the average Coinbase stock price target implies a 9.43% downside potential.
