Bernstein "Coinbase, up 71% despite earnings shock"

▲ Bitcoin (BTC), Coinbase/ChatGPT generated image

Coinbase maintained its bullish Wall Street rating despite a sluggish first-quarter performance. Bernstein evaluated that Coinbase's 'every exchange' strategy has begun to yield results and maintained its 'Outperform' rating and a target price of $330.

According to The Block on May 8 (local time), Bernstein analyzed that while Coinbase's Q1 earnings fell short of market expectations, its long-term growth trajectory is expanding. The target price of $330 implies an upside potential of approximately 71% from the previous closing price of $192.96.

Coinbase's Q1 revenue was $1.41 billion, falling short of market expectations by approximately 5%. During the same period, spot trading volume decreased by approximately 25% from the previous quarter to $202 billion. Although the slowdown in cryptocurrency spot trading put pressure on earnings, Bernstein believes that Coinbase is shifting its business structure to reduce its reliance on spot trading.

The key is the 'every exchange' strategy. Coinbase is transitioning from a platform focused on cryptocurrency spot trading to a comprehensive trading platform that encompasses derivatives, prediction markets, and payment infrastructure. Bernstein highlighted this expansion as a key driver for broadening Coinbase's revenue base.

Market share was also presented as a basis for the bullish assessment. Bernstein analyzed that Coinbase grew in both spot and derivatives trading, pushing its cryptocurrency trading market share to an all-time high. The firm judged that expanding dominance in the trading market is a more important signal than short-term earnings sluggishness.

The revenue contribution from new business segments is also growing. According to Bernstein, Coinbase's derivatives business for retail investors generates over $200 million in annual revenue. Institutional derivatives annual revenue, linked to the acquisition of Deribit, has surpassed $250 million.

Bernstein believes that the market has not yet fully factored in additional catalysts for Coinbase. Progress in US cryptocurrency market structure legislation and the potential official announcement of the White House's strategic Bitcoin (BTC) reserves were cited as positive factors for Coinbase and the broader cryptocurrency industry.

While Coinbase's Q1 results revealed the burden of slowing spot trading, Bernstein's assessment is focused on the company's next growth axis. If the strategy of expanding into derivatives, prediction markets, and payment infrastructure takes hold, Coinbase could be re-evaluated not just as a simple cryptocurrency exchange but as a broad digital asset trading infrastructure company.

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