Here's why Mizuho's Dolev slashed his price target on Coinbase

Coinbase Global Inc (NASDAQ: COIN) is already trading about 20% down from the per-share price at which it debuted on Nasdaq in April. According to Mizuho, however, a prospect for another 15% downside remains on the table.

Dan Dolev reiterates his ‘neutral’ rating on Coinbase

The bank holding company’s Dan Dolev reiterated his ‘neutral’ rating on the Coinbase stock this morning and trimmed his price target from $220 to $210. The analyst cited the following three reasons for his ‘cautious’ outlook on the crypto firm:

1. Coinbase is losing share in Bitcoin
2. Retail traders are trading less on the platform
3. Institutional yield is declining, hitting commissions on transactions

The announcement comes despite the world’s largest cryptocurrency, Bitcoin, having surged from $29,000 in late June to close to $50,000 recently. Coinbase shares are uneventful on Wednesday. The $53 billion company now has a price to earnings ratio of 31.46.

Dan Dolev’s remarks on CNBC’s “TechCheck”

On CNBC’s “TechCheck”, Dolev acknowledged that Coinbase has a regulatory advantage over its competitors, but justified his bear case saying:

“Bitcoin trading should be free, and eventually, it will be free. So, regardless of the regulatory edge, over time, I expect the margins, or the yields, or the take rates on bitcoin trading to come down and be more synonymous with institutions, and I think that’s the big bear case on Coinbase.”

As per the Mizuho analyst, Coinbase needs to focus on “diversifying away from trading and into services like staking etc.,” to survive in the future. In its latest reported quarter, Coinbase said subscription and services contributed more to the total revenue compared to the prior quarter.

The Delaware-headquartered cryptocurrency exchange platform hired ex-Goldman executive in May to lead regulatory issues.