Sell Coinbase as crypto stock's rally runs out of steam, says Compass Point
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Coinbase Just Dropped a $2 Billion Bomb--Here's What It Really Means for Crypto Investors
Coinbase (NASDAQ:COIN) is hitting the convertible debt market with a $2 billion offeringits biggest capital raise of the yearas crypto firms hustle to secure low-cost funding. The company plans to use the proceeds to potentially buy back stock and redeem existing debt. This comes after COIN dropped 17% last week, following a Q2 earnings miss. Revenue rose just 3.3% year-over-year to $1.5 billion, short of analyst estimates and down sharply from $2 billion in Q1. The stock dipped another 4% Tuesday morning to $304.04, though it remains up more than 25% year-to-date. Warning! GuruFocus has detected 7 Warning Signs with COIN. The deal is split into two tranches: zero-coupon notes maturing in 2029 and 2032, offering conversion premiums of 50%55% and 30%35%, respectively. It also includes a capped call featuredesigned to soften dilution risk if the bonds convert into equity. JPMorgan is running the book, and pricing is expected Tuesday night. Coinbase isn't alone here. Crypto-aligned namesfrom Michael Saylor's playbook to GameStophave been rushing into convertible issuance, possibly eyeing a friendlier regulatory environment under President Donald Trump's administration. With $51.9 billion already raised in equity-linked securities across the U.S. this year (though still trailing last year's pace), Coinbase's move could be signaling more than just balance sheet management. It might be a bet on crypto's next cycleand a signal to investors that, despite short-term revenue softness, COIN isn't retreating. Whether this pays off depends on more than just bond termsit hinges on where digital asset markets head next and whether policy winds turn as expected. This article first appeared on GuruFocus. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
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Corporate Insiders Were Dumping Stocks Into July's Record Rally
(Bloomberg) -- Investors across Wall Street eagerly piled into US stocks in July, sending the S&P 500 Index to 10 all-time highs in a month, but a notable group was heading in the opposite direction: corporate executives. Seeking Relief From Heat and Smog, Cities Follow the Wind PATH Train Service Resumes After Fire at Jersey City Station Chicago Curbs Hiring, Travel to Tackle $1 Billion Budget Hole NYC Mayor Adams Gives Bally's Bronx Casino Plan a Second Chance Insiders at just 151 S&P 500 companies bought their own stocks last month, the fewest since at least 2018, according to data compiled by the Washington Service. And while July's selling by corporate insiders slowed from June's pace, purchases dropped even more, pushing the ratio of buying-to-selling to the lowest level in a year, the data shows. The waning appetite among executives came as the stock market rally appeared to be tiring out, even before Friday's selloff. The S&P 500 rose 2.2% in July after gains of 5% in June and 6.2% in May. Still, that three-month advance has suddenly made S&P stocks pricey at nearly 23 times forward earnings, well above the 10-year average of around 18. So a cautious stance among corporate leaders — the group that likely knows their businesses best — may signal concerns about their market valuations and the coming hit to their companies' bottom lines from President Donald Trump's sweeping global tariffs. 'Corporate executives are behaving a lot like institutional investors right now: cautious, conservative, and valuation-sensitive,' said Dave Mazza, chief executive officer of Roundhill Investments. Moreover, economic data has been increasingly troubling. The latest jobs report released Friday pointed to a slowing labor market, with employment growth cooling sharply over the past three months and the unemployment rate inching up last month. And the Federal Reserve's preferred measure of underlying inflation increased in June at one of the fastest paces this year, while consumer spending barely rose. Divided Sentiment Of course, investors need to be careful about reading too much into insiders' buying and selling, as factors beyond market performance could be driving those moves. Still, the lack of enthusiasm from corporate executives about their own shares stands in stark contrast to Wall Street's broader risk-on sentiment in July. The S&P 500 hadn't had a three-month winning streak in almost a year, and the index has soared more than 25% since its April 8 bottom. In addition, corporate buybacks slowed last month and were below typical seasonal levels for a fourth consecutive week through July 25, the latest available data from Bank of America Corp. strategists led by Jill Carey Hall show. The firm acknowledged that one reason for this may be the late start to the earnings season due to the July 4 holiday. But Carey Hall's analysis shows a steady deceleration in buybacks as a share of market capitalization since March, which she says is a sign 'elevated rates and valuations may finally be having some impact' on corporate sentiment. 'The hesitation on buybacks suggests they're more focused on protecting balance sheets than signaling market confidence, which speaks volumes given the market rally,' Roundhill's Mazza said. Analysts who closely track data on corporate share repurchases could argue that they're a more important sentiment indicator than insider selling, since individuals often have ongoing liquidity needs and typically prefer to rebalance from concentrated holdings in their companies, according to Sameer Samana, senior global market strategist at Wells Fargo Investment Institute. Taken together, however, the lack of faith that both corporations and executives are showing in their own shares is a reason for investors to be concerned. 'The people that know the most about companies are telling you that much of the good news is discounted,' Samana said. --With assistance from Elena Popina. AI Flight Pricing Can Push Travelers to the Limit of Their Ability to Pay How Podcast-Obsessed Tech Investors Made a New Media Industry Government Steps Up Campaign Against Business School Diversity What Happens to AI Startups When Their Founders Jump Ship for Big Tech Russia Builds a New Web Around Kremlin's Handpicked Super App ©2025 Bloomberg L.P. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
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43 minutes ago
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Coinbase plans $2bn debt raise four years after previous offering
Coinbase, the biggest US-based crypto exchange, plans to raise another $2 billion worth of debt days after posting a lacklustre earnings report. The offering, which is only open to qualified institutional buyers, comprises $1 billion of so-called Convertible Senior Notes due in 2029, and another $1 billion of notes due in 2032. Shop Top Mortgage Rates Personalized rates in minutes A quicker path to financial freedom Your Path to Homeownership The firm says it will use the funds raised for general corporate purposes, such as investments in and acquisitions of other companies, and to buy back shares and previously issued debt. It comes as Coinbase's second quarter earnings report revealed a 25% drop in income from the previous quarter, 6% below analysts' expectations. Coinbase shares dropped 10% on the news, adding to a 24% drawdown since the stock hit an all-time high of above $444 on July 18. Coinbase declined a request for comment. Higher rates Coinbase conducted a similar debt offering in September 2021, raising $2 billion by issuing senior notes due in 2028 and 2031. The round was oversubscribed, with at least $7 billion in offers for the bonds, Bloomberg News reported at the time. Coinbase agreed to pay just under a 3.4% interest rate on the 2028 notes and slightly over a 3.6% rate on those due in 2031. The interest rates and terms for the latest debt raise will be determined upon pricing of the offering, the firm said. But the rates will almost certainly be higher than the previous offering. That's because it's uncommon for private companies to raise debt at a lower interest rate than the US federal funds rate, which currently sits at 4.25% and 4.5% compared to the 0% to 0.25% rate during Coinbase's previous debt offering. Issuing shares Coinbase said the debt will be convertible into cash or shares at the firm's discretion. This means that Coinbase could issue more shares between the offering and when the notes expire to reduce its debt burden. Investors are often wary of firms issuing more shares as it dilutes their ownership and can negatively impact share price. Coinbase said it expects to attach capped call transactions to the debt that it sells, which the firm says should reduce the issuance of new shares from any future debt conversion. Coinbase shares are down 2.5% on the day. Tim Craig is DL News' Edinburgh-based DeFi Correspondent. Reach out with tips at tim@ Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
