Wall Street lowered its outlook for fintech companies Coinbase ( COIN.O ), and Black ( SQ.N ) was affected by the gloom in the cryptocurrency market which added pressure on the company in addition to rising costs and a sharp rise in interest rates.
Crypto exchange Coinbase is expected to report a second-quarter loss adjustment, while Jack Dorsey-led payments company Block is likely to plunge 70% in updated profits.
Coinbase has had great exposure in the volatility of the crypto market. Thus, Coinbase has lost more than three-quarters of its market capitalization this year.
According to Dan Dolev, chief fintech equity research analyst at Mizuho Securities USA, Coinbase will have a tough ride over the next 12 to 18 months.
As an info, Square changed its name to Block last year with the objective to focus more on blockchain. However, during this year's stock market crash, Block lost half of its market value.
The sale of cryptocurrencies also had a negative impact on companies that invested in cryptocurrencies and many began seeking bankruptcy protection.
Competitive pressure and company downsizing projections are also one of the reasons why fintech stocks are weakening according to Credit Suisse analysts.
