How Should You Play Coinbase Stock Ahead of Q2 Earnings?

Globe and Mail

4 days ago

Coinbase Global COIN is set to report second-quarter 2025 results on July 31, after market close. This company beat estimates in three of the last four reported quarters and matched in one.
The Zacks Consensus Estimate for COIN's second-quarter revenues is pegged at $1.5 billion, indicating a 4.3% increase from the year-ago reported figure.
The consensus estimate for earnings is pegged at 83 cents per share. The Zacks Consensus Estimate for COIN's second-quarter earnings has moved up 1 cent in the past seven days. The estimate suggests a year-over-year decrease of 22.4%.
COIN's Decent Earnings Surprise History
COIN's earnings beat the Zacks Consensus Estimates in three of the trailing four quarters and matched in one, the average surprise being 32.71%.
What the Zacks Model Unveils for COIN
Our proven model predicts an earnings beat for Coinbase this time around. This is because the stock has the right combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), which increases the odds of an earnings beat.
Earnings ESP: Coinbase's Earnings ESP is +12.05%. This is because the Most Accurate Estimate of 93 cents is pegged higher than the Zacks Consensus Estimate of 83 cents. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.
Coinbase Global, Inc. Price and EPS Surprise
Coinbase Global, Inc. price-eps-surprise | Coinbase Global, Inc. Quote
Zacks Rank: Coinbase currently has a Zacks Rank #3. You can see the complete list of today's Zacks #1 Rank stocks here.
Factors Likely to Shape COIN's Q2 Results
The second-quarter performance of Coinbase is likely to have benefited from increased trading volume due to higher volatility. Crypto trading remains a major revenue driver for COIN. The Zacks Consensus Estimate for trading volume is pegged at 235 million, indicating a 4% increase from the year-ago reported quarter. While Institutional trading is likely to have increased, consumer trading is likely to have remained soft in the to-be-reported quarter.
The acquisition of Deribit, the top crypto options exchange, is likely to have proved beneficial for Coinbase in the quarter, adding meaningful new revenue streams and boosting its presence among institutional investors.
The growing emphasis on international expansion, the rise of derivatives and spot trading, and the deeper integration of USD Coin into the crypto ecosystem are likely to have supported growth in Coinbase's two largest revenue streams — trading fees and stablecoins.
Higher crypto asset volatility, coupled with improved crypto asset prices, is likely to have driven the growth of Coinbase One subscribers as well as unit inflows across staking, custody and USDC assets. The Zacks Consensus Estimate for transaction revenues is pegged at $1325 million, indicating an upside of 23% from the year-ago reported quarter.
Coinbase also expects transaction expenses to be in the mid-to-high teens as a percentage of net revenues.
Coinbase's subscription and services revenues were likely bolstered by blockchain rewards, stablecoin-related income and revenue from Coinbase One subscriptions. The ongoing transition from volatile transaction-based income to more stable, recurring revenue streams is likely to have played a key role in driving overall growth. Management estimates an expected growth in stablecoin revenues to be offset by a decline in blockchain rewards revenues owing to lower Ethereum and Solana prices. COIN expects second-quarter subscription and services revenues to be in the range of $600-$680 million. The Zacks Consensus Estimate is pegged at $688 million.
An increase in digital marketing spending is likely to have increased sales and marketing expenses. COIN projects sales and marketing to be between $215 million and $315 million due to potential variability in performance marketing, as well as customer USDC balances in Coinbase products.
Technology investments aimed at improving operational efficiency, combined with disciplined cost control, are likely to have led to lower expenses and enhanced profit margins.
Coinbase expects second-quarter technology and development and general and administrative expenses to be in the range of $700-$750 million, a decline from the previous quarter due to lower variable expenses like infrastructure, customer support and seasonally lower payroll taxes.
COIN's Price Performance & Valuation
The stock outperformed the industry, sector and the S&P 500 in the second quarter of 2025.
Image Source: Zacks Investment Research
The stock is trading at a price-to-earnings ratio of 67.49, higher than the industry's 22.12.
Shares of Robinhood Markets HOOD and Interactive Brokers Group, Inc. IBKR, two other crypto-oriented stocks, are also trading at multiples higher than the industry average.
Investment Thesis
Coinbase is well-positioned to benefit from heightened crypto asset volatility, rising prices, and the increasing adoption of digital assets in a more supportive regulatory landscape. The company continues to strengthen its international footprint through expanded banking relationships, new regulatory licenses and personalized product offerings that cater to varied customer preferences—steps that could fuel sustained long-term growth.
Its strategic pivot from primarily transaction-based revenues to more predictable subscription and service-based income is enhancing revenue stability. Investments in foundational infrastructure, including Base—a platform designed to improve Ethereum's scalability and lower transaction costs—reflect Coinbase's focus on long-term innovation. The growing use of stablecoins is contributing to increased stablecoin-related revenues, while the ongoing rise in Coinbase One subscriptions is expected to further bolster the company's top line.
Coinbase remains focused on operational efficiency through a disciplined cost structure. Although its return on equity lags the industry average, the company's debt position is relatively stronger. In addition, a favorable improvement in the times interest earned ratio offers some financial flexibility. The steady growth in cash and cash equivalents also signals a strengthening liquidity position.
What Should Investors Do Now With COIN Stock?
The Trump administration is swiftly advancing its agenda to make the United States a global hub for cryptocurrency innovation. In this supportive environment, Coinbase—an industry leader—is well-positioned to benefit from efforts to drive growth, increase its share in the spot trading market across both retail and institutional segments, enhance user experience, and pursue ongoing innovation while keeping costs in check.
That said, given the stock's elevated valuation and below-average return on equity, potential investors might consider holding off before entering a position.
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