Jim Chanos to Bet Against Coinbase

Jim Chanos, short-seller has revealed that he is betting against Coinbase and suggested that the crypto exchange is earning more than it should. The president of Kynikos Associates has said in an interview that Coinbase is what we would call a bubble stock.

Without going into the details, he justified his short position by saying that Coinbase is only "sold on a story." In short-selling, an investor can sell a borrowed stock of a stock that they believe will go down in value and make a profit if they are right.

Chanos said, “There are plenty of companies that are in the new economy that have real growth, real cash flows and real earnings, but there is a lot that is just being sold on stories, and we would argue that Coinbase is one that’s being sold on a story.”

Coinbase has a unique position as one of the top crypto exchanges and its $40 billion market capitalisation speaks to its status. He further said that Coinbase is overlearning, is looked at the comparable kinds of exchanges or trading operations. Increasing competition in the crypto industry will lead companies to cut fees, and Coinbase will not be profitable this year, Chanos said.

The company reported strong results in the fourth quarter by beating estimates, but it forecasts lower services revenue in the current quarter due to declining crypto prices. The shares of Coinbase fell 6.6% to $173.25 on Monday and is down over 25% so far this year.