Mackenzie Tatananni

Coinbase Global caught a downgrade on Monday as one analyst braced for a potentially disappointing first-quarter print later in the week.

Monness, Crespi, Hardt & Co. analyst Gus Galá cut his rating on shares of the cryptocurrency trading platform to Neutral from Buy, and removed his $275 price target in a so-called tactical move ahead of Thursday's earnings report.

The analyst wrote in a report that he expects an earnings miss or downward estimate revision to open up better buying opportunities. The stock has been on an upward trajectory since closing at a low of $151.47 in April.

However, near-term caution is "appropriate," Galá continued. While trading volume so far this month has seemingly improved compared with April, limited data mean the firm is "cautious to extrapolate."

Coinbase makes money primarily through transaction fees. The company doesn't charge fees for staking, but earns a commission based on the rewards users receive.

At its core, Coinbase is more than just a digital currency exchange, however. The company co-founded the stablecoin USDC, which is backed by physical U.S. dollars. Stablecoins are expected to have a higher profile as U.S. legislation around cryptocurrency continues to evolve.

President Donald Trump was expected to usher in a new era of crypto-friendly policies and fewer regulations, but efforts to shape the U.S. into the "crypto capital of the planet" are still gaining momentum, with a number of bills under review.

With respect to Coinbase's future performance, a stablecoin bill could be a potential catalyst, Galá wrote.

Currently in focus is the GENIUS Act, a piece of legislation that calls for supervision at both the state and federal level. It provides a looser stablecoin issuer framework than the STABLE Act, a rival crypto bill.

However, the GENIUS Act encountered some snags over the weekend as nine of the 60 votes needed to begin vote-taking were lost after a handful of senators reversed course.

A group of pro-crypto Democrats issued a statement Saturday in which they expressed concern about the bill as it currently stands, calling for stronger provisions on money laundering, national security, and other areas of focus.

Galá, for one, would rather have a bill with greater bipartisan support and cohesive oversight, which would lower the risk of its removal in a less friendly regulatory environment. In its current form, the GENIUS Act introduces the risk of heightened regulatory complexity, Galá wrote.

The STABLE Act, meanwhile, has moved out of the House Committee on Financial Services. In addition to provisions for federal supervision, the bill would require issuers of stablecoins to obtain a banking license, which is an option Coinbase has been evaluating, Galá noted.

Only time will tell if the bill is overwhelmingly positive for the company. Galá, for one, sees it as a possible "net benefit to Coinbase." It seems a stablecoin bill could be an "x-factor."

Shares of the crypto exchange were down 1.3% to $196.91 on Tuesday. The S&P 500 and Nasdaq Composite fell 0.3% and 0.4%, respectively.

Coinbase is set to report its latest financial results on May 8.

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

May 06, 2025 12:41 ET (16:41 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.