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Why is Coinbase stock at an all-time low after its marketplace launch

Why is Coinbase stock at an all-time low after its marketplace launch

Why is Coinbase stock at an all-time low after its marketplace launch
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By CNBCTV18.com Apr 25, 2022 5:04:27 PM IST (Published)

Coinbase announced its NFT marketplace in October 2021, and its launch has been much awaited since then. However, it failed to live up to the excitement as the company stock continued to trudge through the mud.

The blows keep coming for crypto exchange Coinbase as the company stocks dipped to an all-time low on April 22, 2022.

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Within days of launching the beta version of its NFT marketplace, Coinbase stocks plunged by about 15 percent on the Nasdaq, reaching a low of $131.14. This is in continuation of a downward trend that started in January, with the company’s stock seeing a 47.61 percent nosedive since then.
Coinbase announced its NFT marketplace in October 2021, and its launch has been much awaited since then. However, it failed to live up to the excitement as the company stock continued to trudge through the mud.
Since the ‘Crypto Winter’ that started in November 2021 and continued well into the first quarter of 2022, all crypto tokens have struggled to regain their lost footing. However, the sharp free fall of Coinbase stock belittles the YTD performance of even Bitcoin and Ethereum, which have recorded a 16.7 percent and 23.8 percent drop, respectively, in the same time frame.
The stock’s dismal performance over the last few months even caused JPMorgan analyst Kenneth Worthington to cut his price target for COIN by 31 percent. His revised price target stands at $250, and even that seems beyond reach for now.
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He explained the new target price to his clients in a note that read, “The crypto markets are in need of some excitement in terms of new products and/or new use cases to continue to drive the crypto markets to becoming more mainstream, thus driving activity levels.”
Other crypto stocks have been dragging their feet as well this year. Since the start of 2022, Silvergate Capital is down 14 percent, Marathon Holdings has fallen 44.8 percent, Riot Blockchain has slipped by 47.9 percent, and Terawulf is down by a massive 68.8 percent.
Despite diminished investor interest, which is evident from the massive selloff of Coinbase stocks, Owen Lau, an analyst at Oppenheimer, remains bullish. He believes that investors need not panic as fresh opportunities are now on the horizon. Lau presented six critical points to MarketWatch as he rationalised the current trend:
-More exchanges and brokerages are entering the crypto markets and increasing competition.
-Coinbase has massive investments in place (between $4.25 and $5.25 billion), which may impact its profitability in 2022.
-Coinbase stock is overvalued for a 10-year-old company.
-Trading volumes are shallow, but that burden will be eased as the company diversifies and reduces its dependence on spot trading.
-The prolonged crypto winter has been impactful but isn’t a reason for investors to fear the crypto market.
-Regulatory uncertainty is contributing negatively to Coinbase’s business.
“We believe the bear thesis is way overblown and that this creates an opportunity for long-term investors to get into one of the most disruptive companies in the market at what we see as a very attractive valuation,” wrote Lau in a client note, according to MarketWatch.
Coinbase NFT joined the party a bit too late. Giants like OpenSea and Rarible already have their feet firmly planted in the NFT space. However, as crypto adoption grows, there is undoubtedly room for more players.
Moreover, Coinbase is striving to set itself apart by offering several valuable features through its NFT marketplace. And if Lau is to be believed, the company could see a massive turnaround in the months and years to come.
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