The recent rally by Coinbase will not be supported by second-quarter earnings or the approval of bitcoin ETFs, according to Bank of America. Coinbase’s core business has been under pressure over the past year, with trading volumes remaining low as bitcoin and other cryptocurrencies are stuck in a bear market. The company was also sued by the Securities and Exchange Commission in a broad crackdown on the crypto industry. But the stock has rallied sharply over the past month, apparently spurred by applications for bitcoin ETFs from BlackRock and other asset managers. Some of the proposals call for Coinbase to serve as a custodian and a surveillance partner. Bank of America analyst Jason Kupferberg threw cold water on that rally in a note to clients Thursday, reiterating his underperform rating and warning that the projected earnings don’t justify the stock price, even if the SEC reverses course and approves the ETFs. “Despite 2Q data suggesting COIN will materially miss top-line estimates, COIN shares have rallied ~60% since 6/15 on the news of spot Bitcoin ETF applications filed by Blackrock and others. Assuming these applications are approved, the magnitude of P & L benefit for COIN may not be as significant as what shares seem to be implying, and the SEC lawsuit vs. COIN is ongoing,” Kupferberg said. COIN 3M mountain Shares of Coinbase have rallied sharply since mid-June. In fact, the approval of of bitcoin ETFs could hurt Coinbase if their customers shift to using ETFs instead of trading the cryptocurrency directly on the exchange, Kupferberg said. Kupferberg did raise his price target on Coinbase — but by only $2 per share to $49. That is about 43% below where the stock closed on Wednesday. Also on Thursday, Barclays downgraded the stock to underweight from equal weight. The company has not yet announced its second-quarter earnings date. — CNBC’s Michael Bloom contributed reporting.
