Jim Chanos, president and founder of Kynikos Associates, believes Coinbase (COIN) stocks are highly overpriced. As such, his NYC-registered investment entity has decided to short them, even though their value has declined by 50% since November.
- Ever since Coinbase became the largest cryptocurrency exchange to go live on Nasdaq as a publicly-traded company in April last year, the stock price movements have been largely affected by bitcoin and the rest of the market.
- As such, it’s no surprise that the COIN shares skyrocketed to $385 in mid-November, when BTC painted its all-time high at $69,000. Since then, though, the stocks have been on a freefall, shedding approximately 50% of their value and closing at $185 on March 18th.
- Speaking to CNBC on Friday, Chanos outlined his and his company’s reasons why they believe Coinbase is overvalued by naming it a “bubble stock.”
“We basically think Coinbase is over earning. If you do the numbers, their revenue base is roughly 3% to 4% of their custodian assets, their customer assets.”
- He also added that most competitors have picked up their game, and Coinbase will have to reduce its fees to remain competitive.
“There are plenty of companies that are in the new economy that have real growth, real cash flows, and real earnings, but there’s a lot that are just being sold on stories, and we would argue that Coinbase is one being sold on a story,” Chanos concluded.
Featured Image Courtesy of CNBC
