What a brutal run it’s been for Coinbase (NASDAQ:COIN), but can investors really be that surprised? Shares of COIN stock were down 8.6% at today’s lows, although it’s now down “just” 4% on the day.
The move was enough to send Coinbase stock to new 52-week lows for the second straight session. Today’s decline appears to be sparked by a decision from a U.S. Appeals Court.
Here’s the skinny.
Four prior Coinbase users sued the company, but Coinbase argued that due to their terms and conditions, the users had to go to arbitration instead. Coinbase tried to push another case into arbitration as well.
However, a federal judge didn’t agree that arbitration was required, while a “San Francisco-based 9th U.S. Circuit Court of Appeals agreed with that decision.” Nate Raymond summed it up nicely by saying, “business groups say arbitration is more efficient than suing in court. Plaintiffs’ lawyers say arbitration favors companies and that consumers are better off in court.”
What to Do With COIN Stock?
So clearly COIN stock is under pressure because of today’s ruling, but there are a number of catalysts working against it.
First, we’re in a bear market and while some stocks have held up, many have not. Among the worst hit have been growth and tech stocks, of which Coinbase is both. Coupled with the Federal Reserve’s latest hawkish commentary, these stocks — along with the broader market — are back under pressure.
Second, crypto has been decimated and the tone around this group is very negative.
Not only has Bitcoin (BTC-USD) been a terrible performer this year, but the cloud of uncertainty circling Binance and other crypto brokers following the FTX fallout has investors nervous. While Coinbase may not face the same risks, there are some serious trust issues right now in crypto.
That certainly does not work in favor of COIN stock.
I’m not sure where the low is for this stock, but at least for now, Coinbase continues to make new lows going into year-end.
On the date of publication, Bret Kenwell did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
