FTX ‘Contagion Risk’ Fuels Coinbase Stock Plunge—Analyst Worries Users Will ‘Leave Crypto Entirely’

In a Friday morning note to clients, Bank of America’s Jason Kupferberg lowered his rating on Coinbase shares to neutral from buy “in light of the fallout from the FTX collapse” and gave the stock a $50 target—just 8% above current levels of about $46 and down 54% from a $77 target previously.

“We do not think COIN is another FTX, but the fallout… creates new headwinds for Coinbase that warrant additional caution,” Kupferberg wrote, outlining new headwinds that include “diminished confidence in the crypto ecosystem,” particularly among retail investors who helped make up about 76% of Coinbase’s revenue this year.

Though the analyst says the collapse of a large competitor could ultimately help Coinbase gain market share over the long term, he worries “contagion risk” from FTX could linger, adding some users are selling their assets to “leave crypto entirely,” while others move their assets off exchanges and into cold storage.

In another Friday note, Mizuho analyst Dan Dolev said daily trading volumes have fallen about 35% below their yearly averages “suggesting worn out consumers who appear uninterested” in the “deteriorating” crypto industry; Mizuho gives Coinbase a $42 price target—nearly 10% below current prices.

The notes come after Coinbase CFO Alesia Haas on Wednesday acknowledged the contagion risk, telling Wall Street Journal on Wednesday the “fallout of FTX is becoming much more like the 2008 financial crisis—where it’s exposing poor credit practices and is exposing poor risk management,” before adding it could take weeks to understand the scope of the impact.

Shares of Coinbase fell 5% Friday and have plunged about 12% since FTX began unraveling earlier this month, pushing the stock’s losses to a stark 81% this year—far worse than the tech-heavy Nasdaq’s 30% decline.