BofA downgrades Coinbase, says it faces 'a number of new headwinds' after FTX debacle
Analysts at Bank of America downgraded shares of Coinbase (COIN) on Friday as the fallout from FTX's stunning implosion continues to ripple through crypto markets.
Shares of Coinbase were down as much as 5.5% in early trading on Friday.
"We think Coinbase (COIN) likely faces a number of new headwinds over the near/medium-term due to the recent collapse of rival crypto exchange FTX," analysts led by Jason Kupferberg wrote in a note to clients.
They added: "As a result, we downgrade COIN to Neutral from Buy and reduce our estimates. We feel confident that COIN is not 'another FTX' (only $15M of deposits on FTX platform per a Coinbase blog post and $5B of cash on hand as of 9/30), but that does not make them immune from the broader fallout within the crypto ecosystem."
Bank of America now has a $50 price target on shares of the crypto exchange operator, down from $77 previously.
Coinbase shares have lost more than 30% so far this month. Year to date, the stock is down around 80%.
In its downgrade of the stock, Bank of America cited an interview Coinbase CFO Alesia Haas gave to The Wall Street Journal this week in which Haas said a "material decline" in the price of bitcoin (BTC-USD) would have an impact on the company's results.
As of Friday morning, bitcoin was trading near $16,600, down 13% in the last month and about 65% so far this year.
On Thursday, FTX's new CEO, John Jay Ray III, slammed the company's processes and controls under founder and former CEO Sam Bankman-Fried, writing in part, "Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here."
Ray was responsible for winding down Enron after its bankruptcy in 2001.
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