Veteran fund manager Jim Chanos is shorting 'bubble stock' Coinbase

• Famed short-seller Jim Chanos revealed he's betting against crypto exchange Coinbase.
• "Coinbase is what we would call a bubble stock," he told CNBC's Scott Waper on Friday.

Short-seller Jim Chanos revealed he's betting against Coinbase, and suggested the crypto exchange is earning more than it should.

"Coinbase is what we would call a bubble stock," the president and founder of Kynikos Associates told CNBC's Scott Wapner in an interview Friday.

Without going into much detail, he justified his short position by saying Coinbase is just being "sold on a story". In short-selling, an investor sells borrowed shares of a stock they believe will decrease in value, allowing them to pocket a profit if they are right.

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

But Coinbase holds a unique position as one of the top crypto exchanges, and its $40 billion market capitalization speaks to its status, he said.

"We basically think Coinbase is overearning... if you look at comparable kinds of exchanges or trading operations," Chanos added.

Increasing competition in the crypto industry means the company would have to cut its fees, he said, and added "as it is, Coinbase will probably not be profitable this year."

The company posted strong results in the fourth quarter and beat analyst estimates, but it forecast lower services revenue in the current quarter due to declining crypto prices.

"We enter 2022 with even more unknowns, which make our business all the more difficult to forecast," Coinbase wrote in a letter to shareholders, noting that it faces "global macroeconomic headwinds, rising interest rates, inflation, and more recently, geopolitical instability" in addition to an uncertain outlook for cryptocurrencies.

Coinbase shares fell 6.6% to $173.25 on Monday, and is down over 25% so far this year.

Chanos, most famous for shorting Enron before the company's collapse more than 20 years ago, said in December that he has short positions in sports-betting firm DraftKings and food-delivery app DoorDash.

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