Coinbase(COIN) 海通国际·2024-06-23 03:31Investment Rating - The report initiates coverage on Coinbase (COIN US) with an "Outperform" rating compared to the market [3][20]. Core Insights - Coinbase has established itself as a leading virtual asset platform, providing a range of services including trading, storage, staking, custody, and payment solutions, with a mission to enhance economic freedom for over 1 billion people [6][26]. - The company has seen significant growth in its custodial assets and revenue due to the approval of multiple spot Bitcoin ETFs, with custodial assets increasing by 69% to 32 million [17][26]. - Despite competitive pressures, Coinbase's trading volume surged to 530 million before its direct listing on NASDAQ in April 2021 [2][6]. - As of the end of 2023, Coinbase operates in over 100 countries with a workforce of 3,416 employees and a trading volume of $468 billion for the year [6][14]. Financial Performance - The report highlights that Coinbase's trading fees remained stable at 35 basis points in Q1 2024, despite concerns about increased competition [18]. - The company has adopted a disciplined spending approach, maintaining a total expenditure to total revenue ratio of 55% during the bullish market conditions of 2024 [29]. Market Position - Coinbase ranks fifth among centralized exchanges with a market share of 6.8%, while Binance leads with 49.7% [14]. - The approval of Ethereum ETFs is expected to further enhance Coinbase's revenue and market position [26]. Regulatory Compliance - Coinbase emphasizes regulatory compliance and has a robust KYC process, which is more stringent compared to competitors like Binance [30][32]. - The company actively engages in promoting clear regulations for the cryptocurrency industry and supports candidates who favor cryptocurrency legislation [31][32]. Management Team - The management team includes experienced professionals such as Brian Armstrong (CEO), Emilie Choi (COO), and Paul Grewal (Chief Legal Officer), all of whom have extensive backgrounds in technology and law [39][50]. Strategic Initiatives - Coinbase employs a resource allocation model of 70/20/10, focusing 70% on core business operations, 20% on strategic investments, and 10% on high-risk, high-reward projects [27]. - The company has made several strategic acquisitions to enhance its technological capabilities and expand its service offerings [19]. User Metrics - The number of verified users on Coinbase has grown from 32 million in 2019 to 114 million in 2023, with a compound annual growth rate of 37.2% [49]. - Monthly transacting users peaked in 2021 but have since declined, with 8 million users in Q1 2024, representing a 5% year-over-year decrease [49].