Preface

Coinbase’s third-quarter earnings surprised analysts as the company exceeded expectations in transaction and subscription revenues. This report occurred amidst intense Wall Street deliberations about the sustainability of Coinbase's growth. While some optimists highlight increasing B2B crypto payments and strategic partnerships, skeptics raise alarms about rising operational costs and eroding margins. With price targets bracketed between $266 and $510, the debate underscores the contrast in long-term profitability forecasts for this crypto giant. This article digs into these analyst perspectives, exploring the diverse expectations shaping Coinbase's future.

Lazy bag

Coinbase's astonishing Q3 earnings reveal divisive insights among analysts. Growth versus cost remains central, with price targets from $266 to $510 reflecting the polarized outlooks.

Main Body

Coinbase stunned the financial world with its third-quarter earnings, showcasing notable growth in both transaction and subscription revenues. The company reported $1.05 billion in transaction revenue alongside $801 million in adjusted EBITDA, easily surpassing consensus estimates. Key strategies, including the expansion of derivatives trading, subscription services, and integration with Deribit, were pivotal in achieving these results. However, this success has not unified analyst opinions on the company’s future trajectory.

Some analysts encourage optimism due to Coinbase's strategic moves, such as fostering partnerships with industry giants like Citi and Shopify. These alliances are crucial in expanding Coinbase's role in cross-border B2B payments, with the potential for stablecoin-based merchant payments to capture traditional market shares. Additionally, regulatory developments like the potential passage of the Clarity Act in the U.S. could ignite what some term an “Altcoin Summer,” further boosting Coinbase's prospects.

Barclays' analyst Benjamin Budish acknowledges the impressive results yet notes challenges. Budish points out that heightened operating expenses due to hiring and acquisitions could weaken margins. As a result, he revised his price target to $357. On the more optimistic front, Owen Lau from Clear Street suggests an adjusted target of $415, emphasizing Coinbase's potentially lucrative position within the growing B2B payment landscape. Meanwhile, Benchmark’s Mark Palmer, who maintained a buy rating with a $421 target, applauds the earnings display as a return to form amid increasingly favorable crypto market conditions.

Citi analysts, led by Peter Christiansen, express an upbeat perspective, particularly regarding Coinbase’s ability to sign onchain-as-a-service partnerships with major players like Samsung. Innovations such as the company’s Everything Exchange vision and digital asset reforms are anticipated to unleash latent industry innovation, further strengthening Coinbase's market position.

However, contrasting these perspectives is the cautionary stance of Compass Point’s Ed Engel. He warns of the repercussions if cost escalations outpace revenues, especially under potential market cooling conditions. This led him to reduce his 2026 EBITDA forecast, lowering his price target to $266. Engel’s doubt extends to the longevity of stablecoin and staking revenue growth, particularly if interest rate decreases couple with diminished retail crypto enthusiasm.

The consensus agrees on Coinbase's advantageous positioning in derivatives and stablecoin product growth. However, factors like dwindling commission rates and intensifying competition, particularly from Circle Internet's USDC, challenge this expansionist narrative.

The overarching sentiment reflects consensus on near-term success contrasted with caution over long-term sustainability. The brisk pace of innovations like B2B payments and tokenized assets necessitates vigilance in justifying corresponding expenditures. Analyst price targets range widely, indicative of both the vast opportunities and substantial risks ahead.

Key Insights Table