Wall Street analysts brush aside Coinbase cyberattack and SEC investigation as 'little more than noise'

The positive vibes Coinbase enveloped this week took a hit on Thursday after the company confirmed a cyberattack and an investigation into whether it misled investors by inflating user metrics. The double dose of news caused Coinbase's stock to sell off more than 7%, but shares have already recouped those losses in Friday's trading session as analysts and investors brush aside the news as nothing more than a bump on the road.

"While we regard any breach of an exchange’s internal systems as concerning, we also believe the details of the attack on COIN’s systems...make it appear more like a one-off event than a symptom of more pervasive security issues," Mizuho Securities analysts led by Dan Dolev wrote in a note to clients. "[W]e view the SEC’s inquiry into COIN’s possible misrepresentation of its verified users metric...as little more than noise that is highly unlikely to have any material impact on any of the drivers of the bullish thesis on the company’s stock."

A group of cyber criminals tried to extort $20 million from Coinbase to keep stolen customer data off the internet. The company said the incident could cost up to $400 million in expenses relating to remediation costs and voluntary customer reimbursements. The cyberattackers did not access any Coinbase customer funds, private keys, or login systems, and the breach affected less than 1% of its monthly transacting users.

"Coinbase has long been viewed as a high-quality, safer platform across the crypto ecosystem and has enjoyed a 'flight to quality' in recent years," KeyBanc analysts wrote in a note. "Given the nature of the data breach and the planned remedy, we don’t expect that to change in such a way that erodes broad customer trust."

Meanwhile, the U.S. Securities and Exchange Commission is investigating whether the exchange misled investors by inflating its user metrics around the time of its 2021 public debut. "[This is] a hold-over investigation from the prior administration about a metric we stopped reporting two and a half years ago, which was fully disclosed to the public," Paul Grewal, Coinbase’s chief legal officer, told The Block.

Earlier this week, Coinbase became the first pure-play crypto firm set to join the S&P 500 index , leading a 20% surge in its share price. Some analysts call yesterday's selloff a chance to buy the dip.

"While these headlines have impacted near-term sentiment, they haven't changed our long-term view on the stock," analysts at Oppenhimer wrote in a note. "We view this as a buying opportunity."

The investigation does not have to do with figures that the company currently reports, Barclays analysts noted: "With that said, we are somewhat surprised to see such a sharp reaction to this news in particular and believe the reaction is somewhat overblown."

Mizuho reiterated a "buy" rating on COIN while raising the price target from $252 to $301, while Barclays rates "equal-weight" with a $202 target. Oppenheimer reiterated an "outperform" rating with a $292 price target.

"Although you never like to see a breach of internal systems, this cyberattack represents no breach of login systems nor customer wallets, which are always the biggest risks of an exchange," Cantor Fitzgerald analysts wrote. "Further, COIN's refusal to cave to the hackers' demands of $20m makes us believe the company is confident this hack is controlled and siloed to this small subset of customers and information with little potential for further exploitation."

Due to its future S&P 500 inclusion, Bernstein analysts predict Coinbase could see $9 billion in passive inflows from S&P 500-linked ETFs and non-ETFs.

Coinbase shares traded higher by 8% to $264.20 at publication time, according to The Block's COIN price data . The stock is up 32% over the past year.

"While May 15, 2025 will go down as a challenging day for the company, we do not believe the negative headlines will obscure its position as one of the primary beneficiaries of the institutional adoption of crypto, which we expect to accelerate with the emergence of regulatory clarity," Mizuho said.