Coinbase Global Inc. (NASDAQ: COIN) has experienced a drastic drop of nearly 30% in recent weeks. However, even with the decrease in stock value, famed investor Jim Cramer still does not consider it worth investing in. Cramer expressed his concern that Coinbase did not benefit from the recent bank failures, particularly as some people perceived the company as “the JPMorgan of the business.” With inflows going to JPMorgan instead of Coinbase, Cramer stated, “I wouldn’t touch this thing at all.”
Coinbase’s situation has also been highlighted by a recent announcement from Bank of America. The BofA analyst cited data from CoinGecko indicating that transaction volumes remained largely unchanged for Coinbase in Q1 2021. This was despite an upward trend in crypto prices since the start of the year, which is noteworthy as transaction volume makes up a significant portion of Coinbase’s total revenue. Additionally, the analyst noted a 6.0% decline in app downloads and reiterated the “underperform” rating on Coinbase stock.
Coinbase also recently received a Wells notice from the Securities and Exchange Commission for violating US securities laws. This news, combined with the above concerns, has played a role in the 30% decrease in stock value.
It should be noted that Coinbase’s year-to-date performance is still impressive, having risen by 90%. However, despite this, Cramer and Bank of America’s bearish outlook, paired with the recent Wells notice, are likely causing concern for potential investors. In conclusion, the current situation indicates that Coinbase may be a risky investment, and it may be wise to heed Cramer’s advice to avoid it altogether.