Moody’s Downgrades Coinbase: Uncertain Magnitude of SEC Charges

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• Moody’s has downgraded Coinbase from “stable” to “negative” following the SEC’s legal action against the crypto exchange.
• Financial services firm Berenberg Capital told Cointelegraph that it viewed Coinbase shares as “uninvestable” in the near term.
• The downgrade was due to concerns about the impact of the Securities and Exchange Commission action on Coinbase’s day-to-day operations.

Moody’s Downgrades Coinbase Rating

Credit ratings agency Moody’s has downgraded its rating of Coinbase from “stable” to “negative” following the SEC’s legal action against the crypto exchange for allegedly operating as an unregistered securities broker. In a June 8 statement, Moody’s said that this was due to concerns about the impact of the SEC charges on Coinbase’s day-to-day operations.

Berenberg Capital Views Shares As Uninvestable

Meanwhile, financial services firm Berenberg Capital told Cointelegraph that it viewed Coinbase shares as “uninvestable” in the near term. Research analyst Mark Palmer explained that this is due to potential significant impacts of the lawsuit on COIN’s U.S. operations, thus investors should reduce their exposure to its platform until more clarity is given regarding potential outcomes and remedies of this case.

Moody’s Remains Positive On Liquidity Position

Despite the downgrade, Moody’s noted that Coinbase maintains a “strong” liquidity position with $5 billion in cash and equivalents compared to its $3.4 billion in long-term debt and expects it will continue to focus on expense management which may help mitigate declines in transaction revenue.

SEC Charges Could Intensify Trading Volume Declines

Palmer also noted that due to SEC charges, trading volumes could persist or intensify into Q2 which would have a negative impact on COIN stock prices causing further reductions in price targets from analysts like Berenberg who have reduced theirs from $55 to $39 per share. Thus he advised investors should hold off on pursuing any investment in Coinbase shares in the short term until more clarity is given regarding potential outcomes and remedies of this case.

Conclusion

Overall, both Moody’s and Berenberg are taking cautious approaches towards investing in COIN stock until more information about potential outcomes from SEC charges are revealed as they could significantly affect day-to-day operations along with trading volumes going forward into Q2 which would ultimately have a negative impact on stock prices .

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