Summary Coinbase Global is more appealing at yearly lows with a potential double bottom around $160, despite an expectation for weak Q2'25 targets. The crypto platform will likely reset revenue targets after a period of inflated crypto valuations while now focusing on a more stable subscription revenue. Coinbase remains highly profitable with a $9.3 billion cash balance. Investors should consider building a position during this weakness while anticipating some downside potential due to lowered expectations. Along with the market slump, Coinbase Global, Inc. ( COIN ) has fallen back to yearly lows. Unfortunately, cryptocurrencies, like Bitcoin, weren't similarly wiped out providing a far clearer path upwards. My investment thesis is more Bullish on the stock after the froth is gone with a potential double bottom around $160, but the company likely comes out with weak Q2'25 targets. Source: Finviz Resetting Revenue Targets At the recent highs, Coinbase was a tough buy due to the stretched valuation combined with elevated crypto valuations. In essence, the stock was priced for perfection and the company faced the recent scenario where the underlying crypto assets slipped, leading to a reduction in expected revenues. Though, so far, Bitcoin hasn't fallen dramatically, only slipping to $80K. The cryptocurrency is still above the $60K levels from last year, while falling from recent highs around $100K. Source: Coinbase With the hype burned out of the crypto market, Coinbase can build on a more normal transaction base starting in Q2. After all, the big revenue ramp in 2024 only got the business back to the 2022 peak levels of $2.3+ billion in quarterly revenues when Bitcoin originally reached $50K. Data by YCharts The main cryptocurrency doubled and Coinbase didn't even reach the prior peak revenue levels. The company has even made progress to diversify away from Bitcoin trading revenues, with Subscription and Services revenues slowly growing to $641 million in Q4. With Bitcoin surging from $60K at the start of October in Q4 to $100K by mid-December, the business was in an ideal transaction environment during Q4'24. Coinbase saw transaction revenues soar 88% QoQ to $1.35 billion in a jump that likely isn't repeatable for the rest of 2025. Source: Coinbase Q4'24 shareholder letter Coinbase would appear to face some lower transaction revenues during Q1'25, leading to a possible collapse in transactions during Q2. The company only saw Q2/Q3 transaction revenues around $650 million last year, some $900 million lower than the spike in Q4. As back in 2022 and 2023, Coinbase saw both the assets under management and transaction volume slump when crypto prices fell. As an example, transaction values slipped from $1,650 billion in 2021 to only $468 billion by 2023. Coinbase produced $2.2 billion in Q4 revenues and the current estimates are for quarterly revenue only dipping to ~$1.95 billion over the next few quarters. Back in 2022, the business plunged more than 50% to a low of only $0.6 billion. Data by YCharts When reporting Q4 results, Coinbase discussed Q1'25 transaction revenue of $750 million through February 11. The company was on pace for another quarter of $1.5 billion in transaction revenues, but Bitcoin fell from $95K to below $80K to start April. The analyst estimates appear far too high for the reality of the crypto market, where transaction revenues are volatile. Revenues tend to spike like in Q1'24 and Q4'24 followed by much weaker quarters where both transaction volumes and values plunge. Investors have to expect a weak outlook for Q2 after this volatile tariff policy likely leads to people pulling back on trading. More Stock Appeal The stock is far more appealing here, with the market cap back down to $42 billion. Coinbase ran to the prior peak of nearly $350 and the stock is suddenly down over 50% on the anticipation of weaker revenues. Coinbase remains highly profitable with the consensus estimates predicting a $7+ EPS for the next few years, leading to a P/E multiple of ~23x. The risk is that these numbers need to be cut, but ultimately the stock is at an attractive valuation based on the crypto market growing over time to justify a premium valuation. The crypto platform only has transaction expenses at 14% of net revenue, making the business highly profitable. Coinbase is spending about $550 million in adjusted operating expenses on a quarterly basis, to the point where Subscription and Services revenues targeted at $725 million for Q1'25 nearly cover most operating expenses. The company has a massive cash balance of $9.3 billion due to generating net income of $2.6 billion last year. The crypto business is printing money regardless of the volatility. Coinbase just needs to adjust revenue expectations for the reset to be complete. The company will report Q1 results and reset expectations for Q2 in a few weeks, providing an opportunity to use the double bottom here around $160 as an initial entry point with some capital held back for even lower prices and a cut in revenue expectations. A standard method is to invest up to 50% of a full position now, with 50% held back for potentially lower prices. Takeaway The key investor takeaway is that Coinbase Global is far more interesting here, with the stock trading at the yearly lows and some of the excess in cryptocurrencies ringed from the market. Investors should use the weakness to start building a position, knowing some potential downside exists on a lowering of revenue expectations for the next quarter.
