Jim Chanos, founder of the Kynikos Associates investment fund, said he is selling shares of the Coinbase cryptocurrency exchange, as the company will not be able to be profitable this year.
Jim Chanos called Coinbase shares a “bubble” in an interview. He said he expects fees to drop as competition on cryptocurrency exchanges grows and doesn’t think Coinbase can be profitable this year with a market cap of $40 billion. Chanos added that Coinbase shares are selling only because of the site’s reputation.
“We think Coinbase is making too much money. Its revenue base is approximately 3% to 4% of depository and client assets,” Chanos said. “There are a lot of companies in the new economy that have real growth, real cash flows and earnings, but there are also companies that are just selling on history, and we would say that Coinbase is one of them.”
At the same time, Wall Street remains positive about the long-term prospects for Coinbase, despite expectations of some short-term drops. Analysts believe that Coinbase is diversifying its earnings across various segments of the crypto industry, including NFTs. Coinbase shares are down about 1.8% since Friday’s close, for a 26% overall decline this year.
Recall that in April, Coinbase held a direct listing of shares on Nasdaq. On the first day of trading, its shares jumped 31%, but then fell 25%. In February, the exchange posted a report stating that the company’s total revenue for the fourth quarter of 2021 was $2.5 billion, of which $2.2 billion came from trading fees.
Recently, three New York businessmen representing Silver Golub & Teitell filed a class action lawsuit against cryptocurrency exchange Coinbase. Earlier, the exchange announced the imminent launch of an NFT trading platform.
Source: Bits
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