Coinbase: Long-Term Potential Remains But Near-Term Upside Limited; Hold
Summary
- Coinbase's valuation is increasingly tied to Circle/USDC, with stablecoin revenue now the largest part of its non-transaction revenue.
- A sum-of-the-parts approach is best for valuing Coinbase, as its subscription and services revenue has grown to 36% of total net revenue.
- Short-term upside appears limited, as current valuation multiples for both transaction and non-transaction revenue are in line with peers.
- Long-term upside remains, driven by USDC's regulatory compliance and institutional adoption, but risks include Circle underperformance and interest rate changes.
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