Rothschild Redburn Upgrades Coinbase (COIN) to Buy on Revenue Diversification

Core Viewpoint - Coinbase Global, Inc. has been upgraded to a Buy rating by Rothschild Redburn, with a price target of $417, due to its successful revenue diversification strategy [1][2]. Revenue Diversification - The percentage of revenues from retail trading fees has decreased from approximately 90% during 2019-2021 to around 50% projected for 2025 [2]. - Despite the expected pressure on retail transaction fees, growth in retail trading volumes is anticipated to offset this decline [2]. Institutional Trading Growth - Analysts project an increase in institutional trading revenues, driven by greater institutional adoption of cryptocurrency and Coinbase's investments in derivatives capabilities, including the acquisition of Deribit [3]. - The company's strong liquidity, indicated by a current ratio of 2.13, supports its growth strategies [3]. Key Growth Drivers - Subscriptions and Services revenue has emerged as a significant growth driver, with an estimated compound annual growth rate (CAGR) of approximately 53% from 2021 to 2025 [4]. - Revenue from stablecoins, particularly USDC, is also identified as a major and growing component of Coinbase's revenue [4]. Company Overview - Coinbase operates one of the largest cryptocurrency exchanges globally, providing a platform for individuals, institutions, and developers to engage with the digital asset economy [5]. - The company offers a range of services, including buying, selling, and storing cryptocurrencies, as well as staking, lending, and payment solutions [5].