Should You Buy Coinbase Stock Before February 12?

Core Viewpoint - Coinbase is positioned for growth in 2026, driven by clearer U.S. crypto regulations and increasing institutional adoption of cryptocurrencies [1] Financial Performance - In Q3, Coinbase reported $1.9 billion in revenue, $801 million in adjusted EBITDA, and $433 million in net income [2] - The subscription and services segment generated $747 million, accounting for nearly 40% of total revenue [2] - Management anticipates Q4 subscription and services revenue to be between $710 million and $790 million, indicating a shift towards more stable revenue streams [3] Business Mix Improvement - Coinbase Institutional is a key custodian for U.S. spot Bitcoin and Ethereum ETFs, handling nine out of eleven Bitcoin ETFs and eight out of nine Ethereum ETFs in 2024 [4] - Major institutional clients like BlackRock and Pantera Capital are utilizing Coinbase Prime, leading to increased custody and brokerage fees [4] New Revenue Sources - The Ethereum Layer-2 network, Base, is emerging as a significant revenue source, processing transactions faster and at lower costs [5][6] - Coinbase earns revenue through sequencer fees on the Base network and benefits from additional services used by developers and users [7] Growth Opportunities - Derivatives trading, which constitutes 80% of total crypto trading volume, represents a substantial growth opportunity [8] - The acquisition of Deribit, a leading crypto options platform, contributed $52 million to revenue in Q3, with plans to integrate various trading options [8] Valuation Insights - Coinbase's stock trades at approximately 36.1 times forward earnings, reflecting a premium valuation justified by a diversified revenue mix [9] - The revenue is increasingly derived from recurring sources rather than solely from spot trading, although the stock remains sensitive to market conditions [9] Investment Consideration - Long-term investors confident in cryptocurrency adoption may consider a small stake in Coinbase ahead of its upcoming earnings report [10]