Coinbase stock up more than 10% since Friday, despite debt rating downgrade

coin base The stock has plunged in the past year amid a crypto market crash and a spate of brutal earnings reports. But things are looking up for stocks of late, as Coinbase has seen a recent surge in the cryptocurrency market to huge gains.

Coinbase shares were hovering around $56 on Monday, up 10% from last week and up nearly 60% year-to-date. The growth coincides with a jump in the price of Bitcoin, which has risen almost 40% this year.

“The fundamental picture has been better in recent weeks,” said Devin Ryan, a Coinbase analyst at JMP Securities. Fortune. He cited the company’s efforts to cut spending, the broader rally in the cryptocurrency market and a rise in investors shorting Coinbase as reasons for the stock’s revival.

Between a prolonged crypto winterThe sudden rise in Coinbase stock prices reflects renewed optimism about cryptocurrencies, whose market capitalization fell more than 50% last year according to CoinMarketCap. But recent downgrades to Coinbase’s credit ratings may be cause for investor caution.

One day before Coinbase shares made their latest jump, credit ratings giant Moody’s downgraded Your Coinbase Debt Rating, attributing the reduction to the “substantially weakened cash flow and income generation capacity” of the exchange. Moody’s also said that despite Coinbase’s recent decision lay off about 25% of your staffhe expected that “the profitability of the company would continue to be questioned.”

And in early January, S&P Global, one of the largest credit rating agencies, also downgraded the stock’s debt, citing your point of view “Those weakened trade volumes following the FTX collapse will continue to put pressure on Coinbase’s profitability.”

The prices of Coinbase shares and other cryptocurrency-linked assets often follow peaks and troughs. of the shares of technology companiesWhat Amazon Y Google. More broadly, crypto assets are tied to the stock market more than ever, according to the International Monetary Fund. The S&P 500 is up about 3% since markets opened Friday morning, and shares of Amazon and Google are also up.

In response to a request for comment, a Coinbase spokesperson noted to a recent letter written by the company’s CEO, Brian Armstrong. “Coinbase is well capitalized,” he wrote, “and cryptocurrencies are not going anywhere.”

Despite its recent rally, the company’s share price is still well below its value in 2021, when cryptocurrency exchange went public for the first time and shares briefly traded above $300.

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