Coinbase's stock price dropped after the SEC filed a lawsuit against Coinbase, the largest US crypto exchange.
While it remains unclear whether there will be a further decline, a report for Coinbase came from investment bank Berenberg.
Berenberg said in a research report published today that Coinbase (COIN) stocks are not suitable for investment in the near term.
Citing the SEC case as the reason, bank analyst Mark Palmer, citing his previous report, wrote:
“Weak trading volume was already expected in the second quarter of 2023 in COIN.
After the SEC lawsuit, we think this weakness in COIN will continue due to the environment created by the lawsuit."
Lowering its COIN price target from $55 to $39, the bank said, "We expect some investors to reduce their Coinbase exposure given the significant impact of the lawsuit's outcome on Coinbase's US operations." said.
The analyst also stated that 10 US states outside the SEC that allege Coinbase's staking program violates state securities laws also created more uncertainty in the price of COIN.
Finally, the report also noted that the resolution sought by the SEC would likely require the complete shutdown of Coinbase's core business in the US, which would have a predominantly negative impact on stocks.
*Not investment advice.