(Reuters) -Coinbase shares slumped 11% before the bell and are set to open at their lowest in a month on Friday, after the crypto exchange reported a drop in second-quarter adjusted profit due to a slowdown in trading.
The stock was last trading at $335.33, on track to wipe out nearly $11 billion of market value if current levels hold. It has gained 52% this year as of last close, ranking among the top 15 gainers in the benchmark S&P 500 index, which Coinbase joined in May.
“We see the shares as significantly overvalued. We believe that the market is projecting too much future growth for the firm,” Morningstar analyst Michael Miller wrote in a note.
The sharp investor reaction underscores the challenge Coinbase, as a major player in the crypto space, faces to sustain its recent strong revenue growth.
By contrast, Robinhood, which has a smaller footprint in the space, reported that its crypto trading revenue had nearly doubled in the second quarter.
Bullish crypto sentiment encouraged investors to hold their assets, limiting trading activity and contributing to the lower volatility Coinbase saw during the period.
Analysts, however, said trading volumes could improve this quarter, based on the company’s revenue estimates for July.
The month saw a surge in crypto enthusiasm after the Genius Act was signed into law. The landmark legislation pushed bitcoin to a record high.
(Reporting by Alun John in London and Niket Nishant in Bengaluru; Editing by Amanda Cooper, Sriraj Kalluvila and Shilpi Majumdar)
