Coinbase (COIN) Stock Plummets 20% Following $2B Notes Offering—Buying Opportunity or Red Flag?

Coinbase shares nosedive as markets react to the crypto exchange's $2 billion debt play.

Wall Street's verdict? A brutal 20% haircut—because nothing says 'confidence' like dumping convertible notes while retail holds the bag.

Key details:

- COIN's notes offering triggers selloff

- Traders flee despite crypto's recent rally

- Classic move: corporate fundraising meets instant shareholder punishment

Silver lining? Crypto winters breed diamond hands. Either Coinbase is playing 4D chess... or this is another masterclass in perfect market timing (for insiders).

Key Insights:

• Coinbase announced a plan to raise $2 billion from selling convertible senior notes.
• This could help pay off debt and boost the company’s growth after a recent drop in revenue.
• COIN stock has dropped 20% in a week, falling over 5% to almost $301 on August 5.

Crypto exchange Coinbase (NASDAQ: COIN) on Tuesday said it plans to raise $2 billion from selling convertible notes. The firm joined other crypto firms using the same strategy to raise millions from high-net-worth investors, venture capital firms, and institutions amid a favorable environment.

However, COIN stock tumbled more than 5% on Tuesday to increase the weekly fall to 20%. This has raised concerns among investors after revenue missed expectations in Q2.

Coinbase Announces to Raise $2 Billion from Convertible Notes Offering

In a press release on August 5, Coinbase announced a plan to offer $2 billion in convertible senior notes to qualified institutional buyers. This comprised of equal amount of $1 billion in convertible senior notes maturing in 2029 and 2032.

The company will also enable early purchasers to buy an additional $150 million of the 2029 notes and $150 million of the 2032 notes. This is for the settlement of notes within 13 days from the first issue date.

The crypto exchange claimed to enter into privately negotiated capped calls to reduce Coinbase’s Class A common stock’s potential dilution and offset cash payments, which will protect current stockholders.

Will Coinbase Use Proceeds to Buy More Bitcoin?

Coinbase holds a total of 11,776 BTC in its corporate treasury. While the firm hasn’t mentioned any intention to buy Bitcoin or other crypto assets, speculation was sparked on the possibility of it happening in the crypto community.

The firm confirmed to use the proceeds’ portion to meet capped call transactions cost and pay initial purchasers.

Coinbase plans to use the remaining proceeds for general corporate purposes. This included working capital, capital expenditures, and investments in and acquisitions of other companies.

The firm may also use the funds to buy products or technologies, stock repurchase, repay at maturity, or Class A common stock repurchase or redeem before maturity.

COIN Stock Tumbles Amid Downgrade

Coinbase stock has crashed 20% in a week after Q2 earnings reports showed a grim outlook. The total revenue declined 26% to $1.49 billion and revenue nosedived from $1.262 billion to $764 million.

A massive drop in trading volume was reported amid heightened volatility and uncertainty due to tariff jitters.

The COIN stock was trading 5% lower at $301.70 on Tuesday, despite a higher price target set by some Wall Street analysts. Notably, the stock was up just 17% year-to-date 2025, significantly lower than Robinhood (HOOD) and Strategy (MSTR).

Cathie Wood’s ARK sold Coinbase stock worth millions ahead of Q2 earnings. ARK Invest funds were on a buying spree for BitMine Immersion (BMNR) and Nvidia (NVDA) stocks.

After the stock fell, Cathie Wood was among other investors to buy the dip. ARK Invest funds purchased $30 million worth of Coinbase shares last Friday.

The average price target was $376, based on the recent 28 forecasts by Wall Street analysts. Compass Point downgraded the stock to “sell,” with a price target of $238.

Meanwhile, Mizuho Securities reiterated the stock to “hold” and raised the price target to $267, 11% lower than the current market price.

Bitcoin price was trading 2% lower at $113,071 at the time of writing. The 24-hour low and high were $112,701 and $115,729, respectively.

Lower trading activity amid muted Bitcoin price action could impact Coinbase’s revenue and earnings per share.