Story
Coinbase, Circle Shares Fall After Raymond James Initiates with Neutral Ratings
Summary
Raymond James initiated coverage on Coinbase and Circle with 'Market Perform' ratings, citing slowing trade volumes and competitive pressure for Coinbase and a rich valuation for the USDC stablecoin issuer.
Shares of Coinbase (COIN) and Circle Internet Group (CRCL) fell in premarket trading on Wednesday after Raymond James initiated coverage on both digital asset firms with Market Perform ratings, signaling a balanced risk-reward outlook amid a challenging crypto market.
Raymond James set a fair value of $158 for Coinbase and $70 for Circle. Following the announcement, Circle's stock fell 3.2% in premarket trading, while Coinbase shares declined 1.5%, according to the source report.
Headwinds for Coinbase
The analyst note for Coinbase, authored by Madison Suhr, highlighted a sharp slowdown in trading activity and growing competitive threats. The firm pointed to a significant decline in transaction revenue, which fell 40% in the first quarter of 2026.
Key concerns from the report include:
- Slowing Volumes: Retail transaction volume declined 54% year-over-year in Q1 2026, while institutional volume fell 48%.
- Competitive Pressure: New crypto trading services from E*TRADE and Charles Schwab are expected to charge significantly lower fees. E*TRADE's fees are estimated at 50 basis points, roughly one-third of Coinbase’s average retail yield of 150 basis points.
AdDespite the broader market weakness, Raymond James noted that Coinbase has gained trading volume market share, which rose to 8.6% in the first quarter of 2026 from an average of 5-6% in 2025. The analyst sees potential upside in Coinbase's "Everything Exchange" strategy, which includes derivatives and lending, but maintained a neutral stance given the limited visibility into a trading volume recovery.
Circle's Valuation in Focus
For USDC stablecoin issuer Circle, the Raymond James report centered on valuation concerns. The analyst expressed a lack of conviction that there is "meaningful upside" to consensus growth estimates, which project USDC circulation to grow 26% in 2026 and 35% in 2027.
The report noted that Circle shares are trading at a significant premium to peers, at approximately 18 times 2027 EBITDA. This represents a 31% premium to comparable fintech and crypto companies. Key risks cited for Circle include its sensitivity to interest rates, as its revenue is tied to income from its reserves, and its distribution concentration with Coinbase, which accounts for roughly 25% of USDC's market capitalization.
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