Revenue diversity fuels analyst’s latest COIN ‘buy’ rating
Why an analyst is kicking off COIN coverage with “buy” rating
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Two weeks ago we wrote about the outlook for Coinbase as macro uncertainty swirled.
Cantor Fitzgerald analysts, at the time, initiated coverage of COIN — giving the crypto exchange’s shares a buy rating and a $245 price target.
Now, Benchmark analyst Mark Palmer has officially started examining Coinbase’s stock. He similarly gave it a buy rating, with a price target of $252.
When the Cantor pros wrote their COIN outlook on April 9, shares were trading for about $165 — less than half of what the stock was trading for in early December. At 1:30 pm ET today, the stock price hovered around $197.
Palmer notes that Coinbase’s partnership with Circle (allowing it to receive a portion of interest income generated from USDC reserves) means COIN will especially benefit from stablecoin legislation and increased adoption there.
Standard Chartered projects that the stablecoin market cap — currently about $230 billion — could hit $2 trillion by the end of 2028. As I mentioned in yesterday’s newsletter, Agora co-founder Nick van Eck cited that same number by 2030.
“As COIN continues to focus on the growth and expansion of its subscription and services offerings, the result should be a product mix with an increasing percentage of recurring revenue that should serve as a buffer against crypto market volatility,” Palmer wrote in a Wednesday note.
If you forgot, subscription and services revenue is a fancy name for Coinbase’s income streams not derived from transactions. In addition to stablecoin revenue, these include blockchain rewards and custodial fee revenue.
Subscription and services revenue jumped to $641 million in Q4 2024, a 15% increase from the prior quarter. That total represented 29% of Coinbase’s total revenue over that three-month period.
While Palmer pegs the compound annual growth rate of the company’s revenues at ~21% through 2026, he anticipates the CAGR for revenues from its non-trading offerings to be ~36% during that span.
Coinbase is set to report its Q1 results after the market closes on May 8. We’ll be tuning in.
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