Berenberg Capital Adjusts Coinbase Price Target in Response to SEC Lawsuit

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Fredrik Vold

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Fredrik Vold

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June 26, 2023 06:55 EDT

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According to a research report by Berenberg Capital, investment bank analyst Mark Palmer believes that Coinbase shares are currently deemed “uninvestable” in the short term due to the ongoing lawsuit filed by the Securities and Exchange Commission (SEC).

Palmer noted in the report that the anticipated decline in second-quarter trading volumes on Coinbase had already been expected prior to the lawsuit. 

However, the legal action has added a layer of uncertainty, creating an additional burden on the company’s stock.

The analyst emphasized that this uncertainty may intensify, potentially leading to continued weakness in the performance of the Coinbase stock, which trades on the Nasdaq exchange under the ticker COIN.

The report noted that some investors will likely reduce their exposure to Coinbase in response to the lawsuit and the increasing uncertainty surrounding its operations, and said this makes it a less attractive investment option in the near term.

Berenberg has maintained its hold rating on the stock, but lowered its price target from $55 to $39.

Coinbase shares traded up just over 3% on Thursday to $54.90, and hence remain well above Berenberg’s price target.

On the day of the lawsuit, however, the stock did take a hit, falling about 25% from Monday’s opening price to the open the following day.

The end of Coinbase in the US?

According to Berenberg, the SEC’s lawsuit against Coinbase could, if successful, result in the complete closure of Coinbase’s core business in the United States.

If that were to happen, only Coinbase’s newly launched offshore crypto exchange meant for non-US users would remain.

This prospect now weighs heavily on the company’s share price, the Berenberg analyst said.