Coinbase (COIN) is about to report third-quarter earnings Thursday after market shut, and Wall Road is basically anticipating a beat on income.
In response to FactSet, analysts estimate the crypto trade will put up earnings per share (EPS) of $1.14 — quadruple the $0.28 from Q3 final 12 months — and income of $1.8 billion, up from $1.2 billion in the identical interval of 2024.
However the optimism is much from uniform. Analysts at JP Morgan, Barclays and Compass Level agree on energy in blockchain rewards, USDC yields and buying and selling exercise, however cut up sharply on what it means for profitability and the way a lot future worth Coinbase might unlock from its Layer-2 blockchain, Base.
JP Morgan’s Kenneth Worthington is essentially the most bullish of the group, upgrading Coinbase to “Chubby” and laying out a $404 value goal for December 2026. His thesis leans closely on Coinbase’s exploration of a Base token. If launched, Worthington believes the token might command a $12 billion to $34 billion market cap, with Coinbase retaining as a lot as 40%, doubtlessly including $14 to $42 per share in fairness worth.
He additionally sees upside from Coinbase’s efforts to section USDC clients by way of its subscription product, Coinbase One. By limiting stablecoin yield rewards to paying members, Worthington estimates Coinbase might add as much as $1 per share in earnings yearly, relying on buyer habits.
Barclays’ Benjamin Budish, which has an Equal Weight ranking on the corporate, shares the constructive income outlook however takes a extra tempered strategy. He sees adjusted EBITDA coming in 6% above consensus, pushed by retail buying and selling and stronger-than-expected USDC-related curiosity revenue.
He estimates whole Q3 transaction income at $1.05 billion, topping Road forecasts, and fashions $771 million in subscription and companies income, above administration steering. Nevertheless, he lowers his value goal to $361 from $365, citing broader a number of compression available in the market.
Compass Level’s Ed Engel is extra skeptical. Whereas he acknowledges Q3 outcomes will doubtless are available in modestly above expectations, he maintains a “Promote” ranking. His concern facilities on Coinbase’s shift towards lower-margin subscription revenues. Engel argues that USDC and staking payouts to customers eat into profitability, and that buyers could also be underestimating the affect. He additionally warns of slowing retail exercise within the again half of the quarter and believes the acquisition of derivatives platform Deribit — whereas strategically fascinating — faces rising competitors from regulated U.S. venues like CBOE.
Notably, Engel is silent on the Base token potential that JP Morgan touts, suggesting much less conviction or visibility into that long-term play.
One space of settlement: USDC is changing into an more and more vital revenue heart. All three companies spotlight how Coinbase advantages from its partnership with Circle (CRCL) and publicity to rising stablecoin balances. However once more, the analysts diverge on how a lot of that income Coinbase can hold because it tweaks reward constructions and makes an attempt to funnel customers into paid tiers.
As Coinbase pushes additional into subscription companies, on-chain infrastructure and derivatives, Thursday’s earnings report will function a check, not simply of its latest efficiency, however of which imaginative and prescient of the corporate’s future proves extra correct.
