(Bloomberg) — Shares of Coinbase Global Inc. closed at their lowest ever amid a broad-market tumble and a fresh warning from Mizuho Securities about the potential of a revenue miss in the first quarter.

Most Read from Bloomberg

  • Stock Rebound Fails and Futures Plunge on Earnings: Markets Wrap

  • Nvidia Quietly Prepares to Abandon $40 Billion Arm Bid

  • Mark Zuckerberg’s Stablecoin Ambitions Unravel With Diem Sale Talks

  • Stocks Storm Back From 4% Rout to Close Higher: Markets Wrap

  • This Red-Hot Housing Market Is Betting Interest Rates Will Never Rise

The largest U.S. cryptocurrency trading platform fell 3.1% to $185.63 on Tuesday. After the three-day decline, shares are down nearly 50% from a November peak. The stock debuted on the Nasdaq in April.

Renewed signs of a “crypto desert,” alongside trading-fee compression, make Coinbase stock especially unattractive heading into the first half of the year, said Dan Dolev, senior fintech analyst at Mizuho, who cut his price target to $220 from $300 on the stock. With crypto prices plunging, his team is closely watching for any signs that may suggest retail investors are pulling out.

“Just from a psychological perspective, there’s the possibility that a lot of crypto investors would say I am cutting my loss” once they see Bitcoin approach their break-even point, he said.

Coinbase generates the majority of its revenue from trading fees, and its shares often almost perfectly match moves in Bitcoin. Yet, trading volumes are subdued quarter to date, and the platform continues to face pressure to reduce its fees to remain competitive, Dolev said. As a result, the bank cut its first-quarter revenue estimate for Coinbase to $1.38 billion, lower than the consensus of $1.75 billion among Wall Street analysts.

Piper Sandler analysts, led by Richard Repetto, said Coinbase’s recent pullback offers “an attractive entry point” to the growing cryptocurrency and digital asset space. Mainstream adoption of digital assets remains strong, and Coinbase is likely to be the “on ramp” for all things crypto, they wrote in a report on Tuesday.

Story continues

Increasing institutional participation, however, is not a positive factor for Coinbase because they pay a fraction of the fees retail investors pay, risking a “bigger drag” on the take rate, Doley said.

(Adds closing share price.)

Most Read from Bloomberg Businessweek

  • Market Selloff Is Ultimate Test of What’s Real and What’s Not

  • The Tragicomedy of Boris Johnson Enters Its Final Act

  • The Charismatic Developer and the Ponzi Scheme That Suckered San Diego

  • Venture Investors’ $1.4 Billion Bet on News Faces a Reality Check

  • How Did ID.me Get Between You and Your Identity?

©2022 Bloomberg L.P.

(305) 707 0888