Summary Coinbase’s stock fell ~14% recently due to crypto volatility and macro uncertainty, but the my bullish outlook remains unchanged. FQ3 2025 results showed strong double-digit revenue and EPS growth, driven by rising derivatives activity, stablecoin revenue, and expanding institutional demand. Coinbase maintains a low-leverage balance sheet and premium margins, supporting potential multiple expansion and resilience in various rate environments. I reiterate a $385 price target (~45% upside), arguing that improving crypto sentiment and continued business momentum could fuel a rebound. Following my previous article on Coinbase ( COIN ), the cryptocurrency exchange experienced a significant 14% decline in stock price, mainly driven by crypto volatility, uncertainty about the Fed's monetary policy, and AI concerns clouding broader market sentiment. COIN: Stock Price Declined By Roughly 14% Since My Last Article (Seeking Alpha) My bullish thesis hasn't changed. Coinbase remains a market-leading company, presenting a low-leveraged capital structure, high double-digit revenue growth, and premium margins. Pro-crypto administration is fueling cryptocurrency and digital asset adoption with established frameworks such as the GENIUS Act , bringing more clarity to the stablecoin environment, and this remains a core tailwind for the company. The crypto seasonality hasn't played out yet, and I argue the sentiment may rebound from here. Coinbase is heavily dependent on the crypto space, and Bitcoin is experiencing the second-worst Q4 ever, reflecting a 20% drawdown at the time of writing, while it historically delivers a 77% return on average. The setup going into December appears compelling, and I think the crypto company appears well-positioned to rebound from these levels. I still rate Coinbase a Buy with a $385 price target over the next 12 months. This presents a 45% upside possibility and broader market outperformance. I believe COIN may appear to be a compelling opportunity for investors seeking crypto exposure through equity markets. FQ3 2025: A High Double-Digit Growth On October 30, the company delivered FQ3 2025 results. The cryptocurrency exchange posted a significant, high double-digit top and bottom-line growth quarter, reflecting solid market position, strong fundamentals, and excellent execution. The market reacted to the results with a nearly 5% upside over the following trading session. Coinbase posted $1.87 billion in revenue, a 55% growth on a year-over-year basis, and $60 million above what the market had anticipated. The bottom line arrived at $1.50 in diluted EPS, a 5x surge over the past year, versus $0.28 in the same quarter last year, and $0.40 above analysts' estimates. These results indicate robust and steady performance, which I think deserves a premium multiple. COIN: FQ3 2025 Key Highlights (Coinbase Investor Relations) In the shareholder letter , management highlighted that it is successfully scaling crypto operations, indicating $355 million in stablecoin revenue, representing a 7% growth on a quarter-over-quarter basis. In addition, the company heavily focuses on the derivatives area, launching 24/7 perpetual style derivative contracts. It has reached $840 billion in notional derivatives volume, a combined result with Coinbase and Deribit, reflecting an all-time high performance and significant demand for the product. Furthermore, the cryptocurrency company delivered $1.05 billion in transaction revenue, representing a 37% surge on a quarter-over-quarter basis. Subscription and services revenue reached $747 million, a 14% increase on a quarter-over-quarter basis. This suggests that COIN experiences a solid momentum in demand and operates well on all cylinders. If the company can sustain double-digit performance across different revenue streams, the market may continue pricing the stock at a higher premium. Coinbase achieved $295 billion in trading volume, $516 billion in assets on the platform, and $300 billion in assets under custody, representing a substantial moat, solid market position, and supporting a positive outlook. COIN: FQ3 2025 Revenue (Coinbase Investor Relations) The transaction revenue nearly doubled over the past 12 months from approximately $573 million to $1.05 billion. I want to emphasize that meaningful business expansion was achieved across all segments. The largest portion of revenue was derived from consumers, underscoring $844 million in top-line contribution, and a roughly 75% surge on a year-over-year basis. Nevertheless, the institutional client revenue rose the fastest, about 2.5x over the past year, highlighting $135 million in revenue versus $55 million in the same quarter last year. I think this is important because Coinbase is seen as a compelling application for all-in-one cryptocurrency transactions across both retail and institutional investors. A significant surge in top-line results underlines massive demand, and if Coinbase can sustain a dominant position in the market, I think it could tremendously benefit from the broader market growth trend. Stablecoin revenue remained the largest top-line contributor for subscription and services revenue. It has reached $355 million in FQ3 2025, a nearly 44% growth on a year-over-year basis. Moreover, the company achieved growth across all segments, too, supporting my thesis of excellent execution. JP Morgan research highlighted that the stablecoin market is valued at roughly $225 billion . It is anticipated to reach between $500 billion and $750 billion over the next following years. This would indicate a massive surge in stablecoin adoption, which would likely heavily contribute to the broader bullish sentiment for crypto and digital assets. I would also like to highlight that the US administration remains pro-crypto, and if more legislation is signed, creating a more favorable environment for the space, sentiment may dramatically shift, and that would have a positive effect on COIN. COIN: FQ3 2025 Operating Expenses (Coinbase Investor Relations) In the shareholder letter, management also noted that it managed to sustain transaction expense, equaling 14% of net revenue, versus 15% in the same quarter last year. I think this is compelling, indicating management pursues a shareholder-friendly, cost-focused approach. This also heavily contributes to the bottom-line expansion. Furthermore, in the letter, it is underlined that in October 2025, management increased an authorized share repurchase program to $2 billion. Although it didn't provide any additional information on whether it will be used anytime soon, it presents a shareholder-friendly capital allocation approach. I believe if Coin decides to buy back its shares, this could support bottom-line growth expectations. Coinbase is a low-leveraged business, with cash exceeding total obligations . This suggests that share buybacks may be a possibility in the future. COIN: FQ3 2025 Coinbase One (Coinbase Investor Relations) COIN continues its user-focused approach with its Coinbase One, an application offering a range of subscription packages fitting anyone's needs. Such flexibility aims for an elevated user experience and a sticky customer base. The consumers may benefit from all tiers with a fixed monthly fee, and that could also assist COIN in achieving a more steady top-line performance. Overall, I think this was a significant quarter for the company, implying a high double-digit top and bottom line growth. Based on the results, Coinbase is running well on all cylinders, and that fuels a bullish narrative over the following quarters. The cryptocurrency exchange experiences a surge in demand among both consumers and institutions, and with tailwinds tied to stablecoins and digital asset adoption, I argue the positive trend may continue further. Coinbase Isn't Cheap, But More Upside Ahead I kindly invite you to read my previous article on the company, which focuses on a more in-depth valuation analysis. Nevertheless, I would also like to highlight a few key things. The cryptocurrency exchange leader is trading at a 33x earnings multiple . One could argue this appears expensive, but the chart below suggests this reflects a typical business valuation over the past few years. COIN: Forward P/E (YCharts) The chart also highlights that if sentiment improves and Coinbase delivers better performance than anticipated, there is room for multiple expansions. The company traded at roughly 50x earnings multiple around the end of 2024 and mid-summer 2025. If the cryptocurrency space experiences the end-of-year rally, I think this earnings multiple may appear to be a reasonable target. It may be driven by optimistic sentiment and a risk-on environment. COIN: Capital Structure (Seeking Alpha) A low-leveraged capital structure presents an additional argument for a bullish continuation. The company has $7.78 billion in total obligations and $9.77 billion in cash; thus, it could pay its debt with ease. This also reflects that Coinbase appears to be well-positioned to operate in both high and low interest rate environments. Coinbase operates at premium margins, which I think remains a core tailwind for future profitability, bottom-line growth, and higher valuation. The gross profit margin (TTM) of 85% represents a 40% advantage versus peers at 61%. The net income margin (TTM) of 44% signals an 83% premium versus the sector median of 24%. COIN is a profitable business, operating at above-market margins, and this supports a bullish thesis. The markets are pricing in a roughly 85% likelihood of the interest rate cut in December. I think this indicates a dovish Fed's position, and if anticipation materializes, this could spark the end-of-the-year rally for risk assets. I kindly invite you to read my previous article, which presents more detailed information about the company's valuation. Nevertheless, COIN remains a significant, high-quality business with solid fundamentals. The stock price has been heavily suppressed due to uncertainty tied to the macroeconomic outlook and weak cryptocurrency sentiment. If investor confidence returns, I think Coinbase may appreciate in price, followed by a strong continuation of its business performance. Wall Street anticipates $7.06 in diluted EPS for FY2026, and $7.93 in diluted EPS for FY2027. If crypto sentiment rebounds and sustains throughout FY2026, I think the estimates appear conservative. Bitcoin may not replay a typical 4-year cycle, and with institutional adoption, the trend may shift to a less cyclical approach. However, I favor a conservative approach; therefore, if we apply a 49x earnings multiple to the FY2027 EPS estimate of $7.93, we arrive at my price target of $385. If sentiment rebounds, Coinbase is likely to continue solid growth in business performance, supported by its leading market position. This could elevate sentiment and bring valuation to the higher end of the trading range. My Bullish Thesis Remains Unchanged I think Coinbase remains a compelling opportunity for long-term investors seeking a market-leading company in the cryptocurrency landscape. The recent sell-off appears overdone, and with a shift in crypto sentiment, Coinbase may rebound from these levels. It remains a high-growth, high-demand company that focuses on an elevated user experience, operates at premium, above-market margins, and strengthens its market dominance through stablecoin adoption and an all-in-one application approach. The risks and concerns remain as indicated above and in my previously written article. Coinbase is heavily dependent on crypto seasonality, volatility, and sentiment, appears to be exposed to regulatory uncertainty, and monetary policy. Nevertheless, it has a low-leveraged capital structure and appears to be well-positioned to operate throughout different monetary environments. I think tailwinds outweigh the headwinds in the short term. My bullish thesis remains unchanged. I still think Coinbase is a Buy with a $385 price target over the next year. This presents a 45% upside possibility and broader market outperformance. 32 Wall Street analysts project a $384 price target, which is in line with my expectations. It will be interesting to see whether anticipation materializes.
