Coinbase Global, Inc. (NASDAQ:COIN) is leaning more heavily on businesses beyond trading as Wall Street debates how much those newer revenue streams can offset pressure on its core business.
Keefe Bruyette resumed coverage on September 28 with an Outperform rating and a $237 price target, while Mizuho maintains a Neutral rating and a $155 target after the company cut trading fees for active traders.
That $82 gap reflects a disagreement over whether newer businesses can scale while trading economics comes under pressure.
The broader industry shift toward more diversified and recurring revenue streams is also explored in Robinhood (HOOD) Pushes Beyond Trading. Can Wealth Management Bring Steadier Revenue?
Diversification Is Showing Up In The Operating Data
At Citi’s Global TMT Conference on September 10, Coinbase Global, Inc. said prediction markets had crossed a $100 million annualized revenue run rate six months after launch, with second-quarter revenue up 106% quarter-over-quarter and no cannibalization of other products. Coinbase One passed 1 million paying subscribers in the same quarter despite a weaker crypto market, and management said every major cost line came in below the midpoint of guidance, leaving expenses about $500 million below the fourth quarter run rate.
That supports Keefe Bruyette’s view that derivatives and prediction markets can diversify revenue through the cycle.
The evidence is still early, however.
On the second quarter call, CEO Brian Armstrong said there were no specific numbers or forecasts to share on agentic payments.
Fee Pressure Is the Link Between the Two Ratings
Meanwhile, Mizuho’s caution centers on pricing.
Retail take rates near 150 basis points sit well above the 40 to 50 basis points charged by Robinhood, and the firm believes competitive pressure that began with active traders could eventually reach retail customers. That view followed the September 17 fee cut, which lowered spot rates and reduced the entry threshold for the first Advanced tier to $10,000 from $25,000, although retail pricing remained unchanged.
The second quarter call highlighted the same issue.
Asked whether Coinbase One’s zero-fee trading amounts to rate compression, CFO Alesia Haas said members trade more and generate revenue through staking and the Coinbase One Card, adding that revenue would shift through the income statement if adoption broadens.
Citi Adds Another Distribution Channel
Citigroup’s September 28 decision to use Coinbase Global, Inc. for stablecoin payments gives Coinbase Global, Inc. another institutional distribution channel, with balances held at Coinbase earning a reward currently set at 3.75%. The partnership adds to the effort to expand beyond trading, although it does not yet show how much revenue the arrangement could contribute.
What The Smart Money Sees
Hedge fund ownership of Coinbase Global, Inc. slipped to 62 funds from 65 in the second quarter, while short interest rose to 25.23 million shares as of September 15 from 22.92 million a month earlier, representing 11.47% of the float.
The Robinhood comparison also matters on valuation: Robinhood has 4.62% of its float sold short and trades at 45.05 times forward earnings versus 54.35 times for Coinbase as of September 23.
Takeaway
For Coinbase Global, Inc., the central question is whether newer businesses can scale quickly enough to offset pressure on trading economics. At more than 54 times forward earnings, the valuation leaves less room for a slower transition, making the pace of that shift the key test for the stock.
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