Goldman Sachs predicts Coinbase may have to expand its firing spree
US banking giant Goldman Sachs has downgraded its Coinbase price target to “sell”, reducing its price target to $45.
Based on current crypto prices and trading volumes, Goldman believes that the exchange’s revenue will see a 61% decline on a year-on-year basis in 2022.
Goldman believes that Coinbase will have to further reduce its workforce despite the recent layoffs.
as Reported by U.TodayThe major US cryptocurrency exchange abruptly laid off nearly 1,100 employees earlier this month, leaving its workforce down 18%.
CEO Brian Armstrong acknowledged that the exchange’s massive recruitment spree was not sustainable. The crypto billionaire said that such changes were necessary due to fears of a growing recession.
Coinbase stock is down more than 75% since the start of the year, with bitcoin underperforming significantly.
Last week, the company announced the launch of its first bitcoin derivatives product. However, the move is unlikely to have unexpected consequences for the stock, as it will take a long time before the company is able to generate revenue with derivatives. Also, the product will be available for trading only on third party platforms for now.
Mizuho analyst Dan Dolev warned that Coinbase’s margins could continue to decline due to increased competition. Earlier this month, Binance.US, one of the major competitors of the major US exchange, launched zero-fee trading for dollar-based pairs. This will further eat away at Coinbase’s dominance.
Earlier this year, noted short-seller Jim Chanos, who accurately predicted Enron’s collapse, said that crypto stocks are likely to remain under extreme pressure.