Cover compression on mobi export

I’m having an issue with my covers when compiling into mobi – the exported ebook has a severely compressed/pixelated cover. My versions of Kindlegen and Scrivener is up to date. How can I fix this, if possible? Thanks!

I would go into the KindleGen compile option pane and check off the source files setting. This will dump all of the files used to create the Mobi into the same folder the latter will be saved to. The cover image will be in there, and you can check and make sure it looks good at that point. If it does, then KindleGen is the problem and it will be much more difficult to work around, if it is grainy out of Scrivener, there might be some settings we can look at, or even the image itself might need adjusting.