• Berenberg cut its price target on Coinbase (COIN) shares to $39 from $55 and labeled them “uninvestable” in the near term.
• The investment bank cited a U.S. SEC lawsuit against the crypto exchange as creating an overhang on its share price, while also noting a task force of 10 U.S. states alleging Coinbase’s staking rewards program violates state securities laws.
• Berenberg maintained its hold rating on the stock, expecting some investors to reduce their exposure to Coinbase’s platform given the potentially significant impact of the lawsuit’s outcome.
Berenberg Cuts Price Target for Coinbase Shares
Investment bank Berenberg has cut its price target on Coinbase (COIN) shares to $39 from $55 and labeled them “uninvestable” in the near term due to a U.S. Securities and Exchange Commission (SEC) lawsuit against the crypto exchange creating an overhang on its share price. The bank maintained its hold rating on the stock, expecting some investors to reduce their exposure to Coinbase’s platform given the potentially significant impact of the lawsuit’s outcome.
SEC Lawsuit Against Crypto Exchange Creates Overhang
The investment bank was already expected to report weak second-quarter 2023 trading volumes before the SEC filed a lawsuit against Coinbase on Tuesday, leading it to conclude that “the upshot is that we view COIN shares as uninvestable in the near term”. This weakness may now persist and intensify “due to the overhang that the lawsuit has created,” analyst Mark Palmer wrote in a research report Thursday added uncertainty with a task force of 10 U.S. states alleging that Coinbase’s staking rewards program violates state securities laws, furthering adding to what Berenberg believes will be negative pressure on share prices for some time due to legal proceedings surrounding this case and others related thereto.
Potential Closure of Core Business in US Weighs On Shares
The SEC’s desired remedy would likely require complete closure of Coinbase’s core business in US if it is found guilty, which could also cause considerable damage for shareholders accordinga s noted by Berenberb: “Given potential significant impact of lawsuits outcome on Coinbases UUS operations we would expect some investors reducing exposure”.
Uncertainty Continues To Mount For Investors
The ongoing uncertainty caused by these cases continues to mount for investors, who have seen massive gains since last summer when COIN rose from around $50 per share up past $350 at one point this year before dropping back down again due strict regulation enforcement actions like those discussed above taking place across many major markets globally and not just limited solely within US jurisdiction where most companies are based or listed .
Conclusion: Unstable Investment Environment
In conclusion, this article highlights how uncertain times lie ahead for those invested or considering investing into cryptocurrency stocks like COIN as regulators continue clamp down hard upon any suspected violations by exchanges including but not limited too insider trading or other forms market manipulation – all resulting instability within these particularly volatile markets that require long-term dedication & commitment few can afford during such unpredictable times .