Investment Banks/Brokers · #77 in the Retail 100

Coinbase

COIN

Crypto stocks follow bitcoin↑Wall Street plugs into Hyperliquid↓The prediction market boom↑

Our rating: hold
12-month target: $186.58 +28.3%
Expected vs. S&P 500: +9.8 ptsSee the math
Next earnings: Feb 11In 98 days

Circle pays Coinbase about half the interest earned on USDC's reserves, so a quarter of Coinbase's revenue rides on interest rates and USDC balances, not crypto trading.

Summary

Coinbase is the largest U.S. crypto exchange, and most of its revenue has always come from fees on retail crypto trades. That business is in a slump: revenue fell 35% from a year earlier last quarter, and analysts expect a drop of about 24% in 2026. What is different from 2022 is the floor. Interest on customers' USDC brings in about $300M every three months, which kept adjusted EBITDA (operating profit before non-cash costs) positive. The stock now depends on how much trading returns in 2027.

$145.45

-$198.33 (-57.69%)Past year

What Coinbase does

Coinbase is the largest U.S. crypto exchange and stores more crypto than any other platform. It earns trading fees that swing with crypto prices, plus steadier interest on customers' USDC stablecoin.^2,1,19,27,28

What it sells

Consumer trading37% of revenue, Q3 2026
Fees on retail crypto trades, plus derivatives, stocks and prediction markets. The largest line, and the one that swings with prices.
Stablecoin revenue25% of revenue, Q3 2026
Coinbase's share of the interest earned on the Treasuries and cash backing USDC, a dollar-pegged token issued by Circle.
Staking, subscriptions, lending22% of revenue, Q3 2026
Rewards for staking customers' crypto, Coinbase One subscriptions, crypto lending, and custody fees from ETFs and institutions.
Institutional trading8% of revenue, Q3 2026
Trading for hedge funds and asset managers through its prime brokerage, at much lower fees than retail.

Who buys it

Retail traders, 7.4 million of whom transacted each month last quarter, plus hedge funds, ETF issuers and other institutions. About 84% of revenue comes from the U.S. One unnamed counterparty, which we read as Circle, the issuer of USDC, was 27% of revenue.

Where you've seen it

If you own a U.S. bitcoin ETF, Coinbase most likely holds the bitcoin behind it.

How the business makes money

The backstory

Coinbase's problem has always been that its revenue rides on crypto prices: in the 2022 crash sales fell by more than half and the company lost $2.6B. Since then it has built income that doesn't depend on trading, led by its share of the interest on USDC reserves. 2026 is the first real test of that floor: falling prices and multi-year-low volatility cut consumer trading revenue almost in half from a year earlier, while stablecoin income held near $300M.

Coinbase earns trading fees when crypto is busy and interest on customers' USDC all the time. Profit depends on how much trading returns on top of that steady base.^{1,2,10,15,19,26,27}

1 · DemandCrypto pricesRising prices bring retail traders back. Consumer fees are Coinbase's largest revenue line, and they move with prices and volatility.
2 · Cash engineRetail feesRetail traders pay the highest fees. Consumer trading brought in nearly five times what institutional trading did last quarter.
3 · FloorUSDC interestCustomers' USDC earns Coinbase interest. Circle passes on reserve income, so this line follows rates and balances, not trading.
4 · InvestmentUSDC rewardsCoinbase shares some of that interest with users. Rewards pull USDC onto its platform, where Coinbase gets all the income after Circle's cut, not half.
5 · New revenueEverything exchangeNew products widen what customers trade. Derivatives, stocks and prediction markets keep fees coming when spot crypto trading is quiet.
6 · PayoutBuybacksSpare cash buys back stock. Repurchases have offset over 85% of the shares issued as staff pay since late 2024.

Advantages

Its USDC deal with Circle

Major advantage

The biggest advantage, and the hardest to copy. Circle takes an issuer's cut of USDC reserve income; Coinbase then gets the income on USDC held on its platform and half of the rest. Rewards keep pulling more USDC onto Coinbase, which raises its share. Coinbase's 10-Q says it renewed the arrangement with Circle on the same terms.^1,2,10,19,28

The custodian big funds already use

Strong advantage

A strong advantage with institutions. Coinbase stores more crypto than any other platform and is the main custodian for U.S. bitcoin ETFs. Fund managers already keep assets there, which brings custody fees and keeps their trading on Coinbase.¹

Gaining share in a slump

Supporting

Helpful, but it does not offset a weak market. Coinbase's share of global crypto trading reached a record 10.7% last quarter, its fourth straight quarterly gain, in both spot and derivatives. A bigger share means more of any rebound in trading comes to Coinbase.^1,27

What's changing

Cutting costs and adding products through a crypto slump

Coinbase is cutting costs and widening its product range while crypto is quiet. After May's cut of about 700 jobs, 14% of staff, headcount fell from 4,988 to 4,204 by September. In October it finished combining the Deribit options exchange with its international exchange. Its Circle deal renewed on the same terms, and the Fed raised rates in September, which lifts what USDC reserves earn.^{1,3,8,10,27,28}

Competitors

Who else an investor would consider, and how they compare.

Company	Market value	What it does	Compared with Coinbase
Coinbasethis stock	$38.54B	Coinbase is the largest U.S. crypto exchange and stores more crypto than any other platform. It earns trading fees that swing with crypto prices, plus steadier interest on customers' USDC stablecoin.
RobinhoodHOOD	$83.49B	One app for retail stocks, options, crypto and prediction markets.	Robinhood leans on stocks and options; Coinbase leans on crypto and USDC.
CircleCRCL	$20.36B	Issues USDC and earns interest on the Treasuries backing it.	Circle issues USDC; Coinbase distributes it and takes most of the interest.¹⁰
Kraken (private)private	—	Crypto exchange for active traders; it filed for a U.S. listing, then paused it.	Kraken is smaller and private; Coinbase is listed and holds ETF custody.^12,25
Binance (private)private	—	The world's largest crypto exchange by volume, serving mostly non-U.S. traders.	Binance wins on global volume; Coinbase wins on U.S. licenses and trust.

Bull vs. bear: two bets on the same stock

1
A share is a small slice of the company. Its value comes from the profits the company will make in the future.
2
Nobody knows those profits yet. Buyers (bulls) pay today's price betting they'll beat what most people expect. Sellers (bears) bet they'll fall short.
3
When results come in, the price moves toward whichever side was right, and that side makes money.

The question they disagree on

Will Coinbase's revenue rebound about 29% in 2027, to roughly $6.7B, as analysts expect, after falling about a quarter in 2026?^{1,2,4,6,7,8,9,11,21,22,23,24,27,28,30,36}

Bull case: why buyers buy

If crypto trading recovers in 2027 while USDC interest holds steady, a leaner Coinbase keeps more of each extra dollar and the stock rises with sales.

Crypto prices rebounded in September. Total crypto market value rose 37% over the third quarter, and trading fees tend to follow prices.
Costs are lower going into a recovery. Headcount fell from 4,988 to 4,204 since Q1 after May's 14% staff cut, so more of any fee rebound reaches profit.
The floor is getting firmer. Average USDC held on Coinbase reached a record $22B, and the Fed's September rate hike raises what those balances earn.
New products are filling the gap. Prediction markets passed $200M of annualized revenue, growing 82% a quarter on average since launch.

Bear case: why sellers sell

If crypto stays quiet, revenue keeps missing forecasts, and rules or lower balances shrink USDC income, the floor sags and the expected rebound never arrives.

Forecasts keep getting cut. Analysts' 2027 earnings estimate fell from $4.21 to $3.02 per share in 90 days, and Q3 was only a narrow revenue beat after three misses.
Trading has not followed prices yet. Coinbase's spot trading volume fell 8% from Q2, and bitcoin slipped about 5% in the week to October 30.
USDC rewards still lack clear legal cover. The Senate's rewards compromise stalled with the CLARITY Act in September, and a bank regulator will judge reward deals case by case.
Costs are guided up. Adjusted expenses (costs excluding non-cash items) should be $1.0B to $1.16B in Q4 against $975M in Q3, and the Deribit merger may swing volumes.

Where Delphi landsholdWe think today's price already weighs both sides fairly.See why

What to watch

The numbers that will settle the debate.

Consumer transaction revenue■ flat

$450M in Q3 2026, flat from Q2 and down 47% from a year earlier²⁷

The largest line and the one that tracks crypto trading. The 2027 rebound depends on it.

Stablecoin revenue▲ improving

$307M in Q3 2026, up 5% from Q2 and down 6% from a year earlier; average USDC held on Coinbase reached a record $22B²⁷

The steady floor. It follows USDC balances and interest rates, not trading.

Adjusted EBITDA▲ improving

$333M in Q3 2026, up 60% from Q2 and down 58% from a year earlier; the 15th positive quarter in a row²⁷

Operating profit before non-cash items. Shows whether cost cuts keep Coinbase profitable through the slump.

Next earnings report

Feb 11

In 98 days

Expected earnings per share: -$0.08
Expected revenue: $1.29B

What to listen for: Whether trading revenue picks up as crypto prices recover, and whether Q4 costs land inside the $1.0B to $1.16B guide. The date is estimated from last year's February 12 report.^27,30

What would prove this wrong

✕Transaction revenue stays near Q3's level through mid-2027 even as crypto prices rise.
✕Circle's payments shrink through lower rates, smaller USDC balances or new rules.
✕Robinhood, Kraken or banks undercut Coinbase's retail fees and take share.
✕Adjusted EBITDA turns negative, breaking management's promise of profit in all markets.

Our ratingHoldas of Nov 3 close, $145.45 · what ratings mean

USDC interest cushions the downside, but expected gains from a 2027 trading rebound only modestly beat the S&P 500, with costs guided up and 2027 estimates still falling.

12-month target: $186.58 (+28.3%)
S&P 500, same method, with dividends: +18.5%
Expected vs the market: +9.8 points

The math behind the recommendation

Three 12-month price scenarios, weighted by probability, compared with the S&P 500 under the same method.

Now $145.45

Target $186.58

bull case25% likely

$261.14 +80%

Crypto trading rebounds with prices, derivatives and prediction markets keep growing, and revenue for the year to September 2028 nears the top of analysts' range.

$34.20 sales per share × 7.6 = $261.14

base case45% likely

$183.16 +26%

Trading recovers gradually and USDC income holds near today's level, so 2027 revenue grows about 29%, as analysts expect.

$28.97 sales per share × 6.3 = $183.16

bear case30% likely

$129.57 -11%

Crypto stays quiet into 2027, revenue keeps missing, and new rules or smaller USDC balances shrink the stablecoin floor.

$26.11 sales per share × 5 = $129.57

Why these odds: Revenue narrowly beat after three misses, but 2027 earnings estimates are still about 28% below 90 days ago and Q4 costs are guided up. History has 18 quarter-end readings since late 2021. No extra shares: convertible notes convert at $395 or more.

How the prices are built: Wall Street expects sales per share of $28.97 for the year starting a year from now (analysts range from $23.25 to $39.42). Today the stock trades at 6.1 times next year's sales per share; its five-year middle is 7.2.^{30,31,32,33,34,18,27,35}

What tests the call: Q4 2026 earnings: does trading revenue pick up after the Deribit merger (Feb 12)

Buy means expected to beat the S&P 500 by 10+ points over 12 months; Sell means expected to trail it by 10+. Inputs gathered Oct 30; the recommendation updates with the price every day. Model-generated, not personalized investment advice. How ratings work · Track record

What the price assumes

At $145.45, Coinbase is cheaper than usual against its own sales

Coinbase trades at 6.1 times the sales analysts expect over the next 12 months. That ratio is the multiple: what investors pay today for each dollar of a year's sales. That is below its five-year middle of 7.2.

Analysts expect sales to grow about 21% the year after.

Coinbase multiple: 6.1×
Its usual multiple: 7.2×
Base case: +26%
Bear case: −11%

The skewOur bear case loses about 42¢ for every $1 our base case makes. That ratio, how much you stand to lose against how much you stand to make, is the skew.

Last earnings

Q3 2026 results, reported Oct 29

Revenue edged past forecasts and adjusted EBITDA rose 60% from Q2, but revenue was still down 35% from a year earlier and the stock fell 10.6%.^{27,28,29,30,35}

Reported Oct 29	Expected	Actual	Difference
Earnings per share	-$0.23	$2.51	+1189.2%
Revenue	$1.22B	$1.22B	-0.0%

Stock reaction: -10.6% next day (close to close, $160.59 to $143.54)

Why the stock moved

Up: revenue of $1.216B was slightly above the roughly $1.20B consensus, the first beat after three straight misses.
Up: adjusted expenses of $975M came in below management's $980M to $1,080M outlook, lifting adjusted EBITDA to $333M.
Down: Q4 adjusted expenses are guided to $1.007B to $1.157B, above Q3's $975M.
Down: transaction revenue of $590M was flat from Q2. No report we found names the cause of the drop.

What it means for the stock: Mostly confirmed the story. Revenue stopped falling and USDC income held up, but the trading rebound analysts need for 2027 has not started, and costs are guided higher.