The investment bank recommended investors to sell COIN as declining crypto prices put pressure on the crypto exchange.
Both re-ratings come on the heels of Coinbase dramatically reducing its workforce as it braces for the bear market. In the past month, Coinbase rescinded job offers and enacted a hiring freeze before laying off about 18% of its workforce, totaling 1,100 of its employees. Coinbase CEO Brian ArmstrongHowever Goldman Sachs analysts don’t believe these steps were enough.
The report added that in order to survive Coinbase will need to make substantial reductions to its cost base to “stem the resulting cashburn” as retail trading activity slows down. As the market has entered what many coined the new “crypto winter,” Goldman analysts believe that Coinbase faces the choice between shareholder dilution and reductions in “effective employee compensation,” which could negatively impact talent retention.
That said, the analysts commended Coinbase’s Wednesday decision to merge Coinbase and Coinbase Pro onto a single platform. Nance said the merger “has the potential to reduce the switching costs and make lower pricing more easily available to its users.” Goldman Sachs is not alone among Wall Street juggernauts in reducing its expectations for COIN as a result of the current downturn. J.P. Morgan also revised its Coinbase rating earlier this month, downgrading the stock to “neutral” from “overweight” just
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