Coinbase Stock Is On A Roll. Moody’s still downgrades its Credit Rating.

Lots of text

Share in

Coinbase Global

has been on a roll, torn high amid a rally in the price of Bitcoin. The same purpose did not spill over into the bonds, and

Coinbase

Moody’s downgraded debt and corporate bonds trade in negative territory.

While Coinbase’s (ticker: COIN ) stock has remained down more than 70% over the past year, shares of the cryptocurrency trader have quadrupled. rallied more than 55% in the past month and was poised for more gains on Monday. Help with the broken stock a big jump in the price of

Bitcoin

—the popular crypto, with which Coinbase often moves together—has climbed more than 30% in two weeks.

The picture for Coinbase equity is improving, with a price estimate for the stock among analysts surveyed by FactSet indicating higher-than-expected 10% from current levels – even after a dramatic increase. But the same cannot be said about Coinbase credit.

The company’s bonds maturing in 2026, 2028, and 2031 are all yielding above 10%, firmly in junk-bond territory. While the 2026 bond benefited from the latest prospect—trading at its highest level since issuance—the same could not be done for long-term bonds, which are trading at deep discounts that have gotten even deeper, and scroll down again. last week.

Not helping the picture is a downgrade from credit agency Moody’s, which has followed its peer S&P Global in turning dark on Coinbase.

Moody’s downgraded Coinbase’s corporate family rating to B2 from Ba3 last Thursday and lowered its senior bond rating to B1 from Ba2, with a stable outlook. Both the B2 and B1 ratings represent liabilities “considered specifically … to be of high credit risk.”

The activity rate “reflects the very weak revenue and earnings of Coinbase due to the difficult conditions in the crypto asset operating environment characterized by a significant drop in asset prices and a decrease in human traffic.” buy,” said analysts at Moody’s.

Moody’s expects profitability at Coinbase to “remain challenging” despite its closeness indication of the extent of the suspension in an attempt to save costs-a move welcomed by Wall Street and alleviated the worst fears.

But there is a high level in a stable outlook, which “is driven by its current good health condition which is mitigating the threat of cash that the company is facing.”

“The stable outlook also reflects Coinbase’s management efforts and considers the increase in revenue associated with the company’s revenue growth,” Moody’s analysts added.

While the disconnect still remains between Coinbase’s debt and equity—not helped by two major financial filings in the same number of weeks—the outlook may not be as bad as the Credit rates are recommended. Perhaps investors will only have to use Coinbase’s long-term debt for a little longer to find hope.

Letter to Jack Denton p jack.denton@barrons.com