Cryptocurrency alternate Coinbase Global COIN is the newest topic of a bearish report from The Bear Cave, a subscription e-newsletter service that claims it exposes “bad companies.” Here’s the highlights of the report.
What Happened: The report highlights the important thing factors of Coinbase shedding over $1 billion within the final reported fiscal quarter and what may occur if the corporate goes bankrupt.
Bear Cave mentioned that Coinbase warned that if it declares chapter, “customers could be treated as our general unsecured creditors.”
The report additionally highlights elevated competitors within the crypto area and “failing leadership.”
Among opponents within the area, Bear Cave identify checks many crypto particular platforms like Binance, Crypto.com and FTX, together with inventory buying and selling platforms like Robinhood Markets HOOD, WeBull, eToro and others that additionally permit crypto transactions.
“Two days ago, Schwab, Citadel Securities, Fidelity’s Digital Asset division and Virtu Financial formed EDX Markets, a new crypto exchange,” the report mentioned.
“Because many of Coinbase’s new competitors have services beyond cryptocurrency trading, they can offer crypto trading at no cost as a loss leader to attract new users.”
FTX is more and more a competitor to Coinbase, in line with Bear Cave, with FTX CEO Sam Bankman-Fried saying FTX has larger each day buying and selling quantity and quantity per consumer.
“FTX has led crypto’s takeover of sports, launched viral ad campaigns with Tom Brady and last week announced a partnership with GameStop.”
Bear Cave On Coinbase’s C-Suite: Coinbase CEO Brian Armstrong is talked about as a possible unfavorable for Coinbase within the Bear Cave report. Comments from Armstrong in July 2022 counsel he isn’t very open to suggestions, the report mentioned.
“Most of the best leaders are people who can act when they believe they are doing something net positive for the world and humanity, and they actually don’t really care if they piss off some portion of the people,” Armstrong mentioned.
A Super Bowl industrial Coinbase aired that Armstrong took credit score for was later a viral story when an advert company mentioned they got here up with the thought for the industrial.
The report makes point out of dangerous office administration and a petition in opposition to Coinbase executives, which Armstrong publicly mentioned was “really dumb on multiple levels.”
Related Link: Coinbase Q2 Earnings Highlights: Revenue And EPS Miss, Company Remains Optimistic
The Backdrop At Coinbase: The report from Bear Cave comes as Coinbase shares have struggled in 2022 on the heels of a serious cryptocurrency bear market. Coinbase shares are down 69% year-to-date in 2022.
A extremely anticipated NFT market that launched earlier this 12 months was much less profitable than anticipated, which was additionally highlighted in Thursday’s report.
“The Coinbase NFT marketplace that launched in April 2022 was labeled a ‘resounding flop’ after averaging around $37,000 in daily volume in the first three months – about 0.05% of the volume of competitor OpenSea,” Bear Cave mentioned.
The bearish report from Bear Cave follows famed brief vendor Jim Chanos taking up the corporate earlier this 12 months.
“Coinbase is what we would call one of the bubble stocks,” Chanos mentioned.
The report from Chanos highlighted investor enthusiasm, with Coinbase being one of many few publicly traded cryptocurrency pure performs.
“We think as competition increases amongst the exchanges, you’re going to see fee compression and as it is Coinbase will probably not be profitable this year.”
COIN Price Action: Coinbase shares have been down 1.04% to $77.988 on Thursday versus a 52-week buying and selling vary of $40.83 to $368.90. Shares went public in April 2021 at a gap value of $381.