Shares of Coinbase Global (NASDAQ:COIN) have plummeted ~82% so far this year and the crypto exchange faces various challenges as major cryptocurrencies, including Bitcoin (BTC-USD), continue to spiral down.
While investor interest in the crypto space has taken a hit at present, potential investors of Coinbase stock need to be abreast of the key risks the company faces.
We employ the powerful TipRanks Risk Factors tool to take a look. COIN stock currently has a total of 87 risks ( According to its latest third-quarter filings) with the Finance & Corporate and Ability to Sell risk categories making up over half of these.
The Federal Reserve continues to raise interest rates and likely will not stop at four mega hikes. Consequently, COIN faces risk from interest rate fluctuations. The company has noted, “As seen to date in 2022, when interest rates increase, investors may choose to shift their asset allocations, which could negatively impact our stock price or the crypto economy more generally.”
Further, COIN recently launched a beta of Coinbase NFT, which is a peer-to-peer marketplace for minting, transacting, and discovering non-fungible tokens (NFTs). This can expose COIN to legal, regulatory, or other risks which could harm its performance.
The regulatory and legal framework related to new-age assets is still evolving and the move exposes COIN to potential issues related to intellectual property rights, privacy, cybersecurity, money laundering as well as securities law compliance.
As the COVID-19 pandemic subsides, a number of companies are enacting back-to-office norms with Mr. Elon Musk’s recent ultimatum to Twitter employees being a prime example. COIN is a remote-first company and consequently is exposed to a higher operations risk.
Compared to a sector average of 13.1% risks stemming from the Ability to Sell risk category, COIN faces higher risks at 18.4% at present.
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