Down 45% From Its Highs, This Analyst Thinks You Should Buy the Dip in Coinbase Stock

Core Viewpoint - Coinbase's stock performance closely mirrors the cryptocurrency market cycle, experiencing significant fluctuations in response to Bitcoin's price movements and regulatory developments [1][4]. Company Overview - Founded in 2012, Coinbase has a market capitalization of $64.9 billion and is one of the largest cryptocurrency exchanges globally, catering to both retail and institutional investors [2]. - The company is diversifying its offerings beyond trading, including stablecoin payments, crypto cards, and subscriptions, aiming to become a comprehensive digital finance platform [2][14]. Recent Stock Performance - Coinbase's stock peaked at $444.64 in July but has since declined nearly 45%, with a 37% drop over the past six months and close to 9% in the last month [1][4]. - Analysts from Bank of America upgraded COIN to "Buy" with a target price of $340, viewing the recent pullback as a buying opportunity [3][15]. Financial Performance - In Q3 2025, Coinbase reported total revenue of $1.87 billion, a 55% increase year-over-year and a 25% increase from the previous quarter, exceeding market expectations [8]. - Transaction revenue rose to $1 billion, up 37% sequentially, while subscription and services revenue increased by 14% to $747 million, indicating a successful diversification strategy [8][9]. Profitability Metrics - Adjusted net income surged 151% year-over-year to $421 million, with adjusted EBITDA increasing 78% to $801 million, and adjusted EPS reached $1.44, more than doubling from the previous year [9]. - The balance sheet showed strong liquidity of $11.9 billion, supported by a $3 billion convertible debt issuance, providing the company with flexibility for investments and acquisitions [10]. Market Trends and Future Outlook - Analysts expect subscription and services revenue to range between $710 million and $790 million, driven by growth in USDC and an expanding subscriber base [12]. - Analysts project adjusted EPS for Q4 to be around $0.83, down 75% year-over-year, but anticipate a rebound in fiscal 2026 with a 25% annual growth [13]. Analyst Sentiment - Wall Street maintains a "Moderate Buy" consensus on COIN, with a mean price target of $362.98, suggesting a potential rebound of 48% [16]. - Bank of America sees long-term value in Coinbase's initiatives and maintains a price target of $340, indicating a 39% upside potential [15].