An analyst advised to sell Coinbase shares. Why should you take profits now?

Analyst HC Wainwright refused to recommend buying the securities of crypto exchange Coinbase and now advises investors to get rid of them. In his opinion, now is the best time to lock in the profits that investors have made in recent months. The stock has risen sharply, and now its valuation is overvalued and ahead of the fundamentals. It is worth getting rid of the securities before the release of the quarterly report, which HC Wainwright believes will fall short of Wall Street's expectations. Shares of Coinbase at the trading on July 10 updated the maximum for four years.

HC Wainwright analyst Mike Colonnese downgraded Coinbase's stock from Buy to Sell with a target price of $305 to $300, translates TipRanks. The new target implies a 22% drop in cryptocurrency exchange quotes from the closing price on July 10.

According to Colonnese, Coinbase's 2.5x price growth over the past three months is outpacing the company's fundamentals. And while Colonnese still considers Coinbase one of the leading cryptocurrency exchanges and maintains a positive outlook on the sector as a whole, he noted that the current share price is overvalued: it is now trading at record levels and about 56 times the consensus earnings forecast for 2025.

Colonnese predicts that the company's financial results for the second quarter of 2025 will disappoint Wall Street, which could trigger a chain reaction: other analysts will also start downgrading ratings and revising target prices.

HC Wainwright has lowered expectations for Coinbase's second-quarter revenue and now believes it will be $1.493 billion instead of the previously projected $1.56 billion. The Wall Street consensus is $1.67 billion, TipRanks notes. The reason for the decline in revenue will be a decline in transaction revenue, HC Wainwright notes. For example, Coinbase's spot transaction volume in the second quarter fell 41% quarter-on-quarter to $232 billion, adds Investing.com, citing data from The Block and CCData. For the full year 2025, the analyst now expects $6.8 billion in revenue (previously $7.4 billion) and $4.43 earnings per share (previously $5.92).

Therefore, according to the expert HC Wainwright, now is the best time to fix profits - just before the release of quarterly reports, which is expected on July 31.

In trading on July 10, Coinbase shares jumped 4% to $388.96. That was their highest since April 2021, when the company went public on the Nasdaq exchange. They hit a high of $429.5 in the first week of trading, but then sagged and haven't been able to get back above $400 a share since.

Over the past three months, Coinbase securities have brought investors a return of almost 130%. For comparison: the main U.S. stock index S&P 500 for the same period added about 20%. Coinbase's rally follows Circle's IPO on June 5, TipRanks notes. Circle and Coinbase jointly distribute USDC steiblcoin (its rate is pegged to the dollar) - the second most capitalized in the world - and share revenue from reserves: each receives 50% of the profit coming from storing USDC on third-party platforms. Additional growth of shares was also provided by the US Senate's GENIUS bill on regulation of stablecoins - it establishes the rules under which American companies will be able to issue and use dollar-denominated stablecoins for settlements. The document is now being considered in the House of Representatives.

On June 29, BofA analyst Craig Siegenthaler raised his target price on Coinbase shares to $397 from $259, while maintaining a neutral rating on the stock, TipRanks reports. BofA's new target is 3% above the current share price. Siegenthaler cited positive factors driving Coinbase's stock upside, including improved crypto market regulation and a partnership with Circle. However, the current stock valuation already takes into account all the positive factors, and activity in the retail crypto trading market is now close to its peak, BofA believes.

48% of analysts, who assigned ratings to Coinbase securities, are neutral and advise to hold (Hold). Another 43% recommend investors buy them (Buy and Overweight ratings), while the remaining recommend selling them (Underweight and Sell). The Wall Street consensus price target of $306.5 implies a decline in the company's market value of more than 21%.

This article was AI-translated and verified by a human editor