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Coinbase Stock Price Prediction: The Fall From Grace

NY, USA - FEBRUARY 29, 2020: Homepage of coinbase website on the display of PC, url - coinbase.com.

Many tech companies have had a dramatic fall from grace recently as concerns about the Fed and slowing growth continue. Coinbase is one of them. On Tuesday, the Coinbase stock price crashed by more than 15% in extended hours after the firm published weak earnings and guidance. The COIN shares are trading at $61.5, which is significantly lower than its all-time high of $375.

Why has COIN collapsed?

Coinbase, which was once valued at over $70 billion, has seen its market cap crumble to less than $14 billion. This dramatic turn of events has happened as cryptocurrency prices have crashed and its platform users have declined. The same situation has happened among many cryptocurrency exchanges, including Binance and Crypto.com.

On Tuesday, Coinbase said that its total revenue in Q1 was just $1.17 billion, which missed analysts estimates by $309 million. Its earnings-per-share crashed to -$1.26 even as the company generated a positive EBITDA. Coinbase saw its trading volume crash in Q1 as the prices of most coins declined sharply. For example, in April, the number of monthly users retreated to about 8.9 million while volume dropped to $74 billion. Its subscription business also disappointed.

So, is Coinbase a good investment? The answer to this question will depends on the performance of digital coins. And this quarter, it seems like things are getting worse, with Bitcoin falling below $30,000. Historically, the performance of Bitcoin and other coins has a close correlation with that of Coinbase. 

Therefore, with a combination of high-interest rates and weak crypto performance, there is a likelihood that COIN stock price will remain under pressure. However, these conditions will not happen forever. AS such, there is a possibility that the company will bounce back as it shifts from being a growth to value company.

Coinbase stock price prediction

The COIN share price has had a tragic crash from $375 to about $70. As a result, the company has managed to drop below the key support at $150.50, which was the lowest point on March 15th. On the 4H chart, its Relative Strength Index (RSI) has moved below the oversold level. It is also below the dots of the parabolic SAR indicator. Therefore, I suspect that the shares will keep falling as investors eye the next reference level at $50. The stop for this forecast will be at about $80.