Shares of the large cryptocurrency exchange Coinbase (COIN -2.27%) had fallen roughly 4% as of 1:30 p.m. EST today after receiving some negative sentiment from Wall Street and as its operations in India struggle to get off the ground.
Earlier today, Raymond James analyst Patrick Shaughnessy maintained his underperform rating on Coinbase, citing weak trading volumes in the first quarter.
"First quarter results will likely see year-on-year volume declines for Coinbase for the first time as a public company, as a difficult comp was combined with an uneven market backdrop to start the year," Shaughnessy wrote in a research note. Shaughnessy expects trading volume to come in around $307 billion in Q1, down 9% year over year and 44% from the previous quarter.
Slower cryptocurrency exchange volume can be seen in data compiled from The Block, which shows that monthly trading volume in January, February, and March came in lower than the last five months of 2021 and lower than levels seen in the first three months of 2021.
In other news, after launching in India on Friday, Coinbase has currently suspended purchases in the country. Multiple media outlets report that Coinbase has told customers in India that purchases through India's Unified Payments Interface (UPI) payments system are not being accepted. Coinbase says the UPI, which is run by the National Payments Corporation of India (NPCI), a division of India's central bank, is the only way customers in India can purchase cryptocurrencies.
However, NPCI tweeted on April 7 that it was not aware of any crypto exchange using UPI, suggesting there is some kind of miscommunication between the two parties.
A bad Wall Street rating and poor launch in India more than explain why the stock is struggling today. Truthfully, with the price of Bitcoin also struggling, I'm surprised it's not down more.
But trading below $155 per share and at 4.5 times revenue is a risk-reward opportunity I like. On an earnings basis, Coinbase is expensive, trading at nearly 32 times forward earnings, but the company has leading market share in an extremely fast-growing cryptocurrency market. Long term, I think the stock has a lot of upside at these levels.