Stock in Coinbase Declines Following Two Setbacks: Supreme Court Ruling and Ark Share Sale
In a significant turn of events, the U.S. Supreme Court has declined to hear Coinbase user James Harper's appeal against the Internal Revenue Service (IRS) access to transaction data without specific targets. This decision upholds lower court rulings that permitted the IRS to obtain broad user data from Coinbase under a "John Doe" summons, affecting over 14,000 users suspected of underreporting cryptocurrency income.
The legal ruling, which removes certain privacy protections for centralised crypto exchange users, has raised concerns among privacy advocates. They warn that it could expand government surveillance powers across the digital economy, potentially impacting banks, internet service providers (ISPs), and other technology providers, beyond just the crypto sector.
Despite this setback, Coinbase's stock performance in Q2 has been impressive. Trading under the COIN ticker on the Nasdaq, the company's shares more than doubled from $172.82 (April 1 open) to $350.49 (June 30 close). This strong performance was evident even amid selling pressure from ARK Invest and the Supreme Court's decision, indicating continued investor confidence in the company.
ARK Invest sold a total of $95 million worth of Coinbase shares as part of a portfolio rebalancing, contributing to the selling pressure. However, the stock has continued to trade at a premium, with an all-time high close of $375 and analyst price targets ranging from $402 to $510.
Benchmark analysts have called Coinbase "transformative," while Bernstein analysts consider the company "misunderstood." These high price targets indicate a bullish sentiment towards Coinbase's future performance. William Blair analyst A. Jeffrey expects Coinbase to report a $1.33 per share gain when it releases earnings.
The upcoming earnings call, scheduled for early August, will provide more insight into Coinbase's financial health and potential future growth. The call will be closely watched by investors, as it could offer clues about the company's strategy to navigate the challenging regulatory landscape and maintain its strong growth trajectory.
In midday trading, Coinbase's stock was down 2.1%, a brief dip following a brief rally before the decline. Despite this dip, the overall sentiment towards Coinbase remains positive, with investors optimistic about the company's potential for continued growth and innovation in the rapidly evolving crypto space.
[1] Coinbase Faces Supreme Court Decision Over IRS Data Access, CoinDesk, June 29, 2022, [2] Coinbase's Supreme Court Case: What's at Stake for Privacy and Crypto, Electronic Frontier Foundation, June 28, 2022,
[1] The Supreme Court's decision to uphold the IRS' access to Coinbase user data raises questions about privacy in the crypto exchange industry, potentially broadening government surveillance to finance, banking, and tech sectors, including bitcoin and initial coin offerings (ICOs).
[2] Meanwhile, Coinbase's stock performance remains bullish, with shares trading at a premium despite recent selling pressure. The upcoming earnings call offers insight into the company's financial health and growth strategy in the rapidly evolving crypto finance landscape.
