Coinbase(COIN) Tianfeng Securities·2024-11-11 10:28Investment Rating - The report assigns a "Buy" rating for the company, indicating an expected relative return of over 20% within the next six months [8]. Core Insights - Coinbase's Q3 2024 revenue was $1.21 billion, below the expected $1.25 billion, with trading revenue at $570 million, also below the consensus estimate of $620 million. Subscription and services revenue was $560 million, falling short of the adjusted expectation of $570 million. Adjusted EBITDA was $450 million, slightly below the consensus of $460 million, and adjusted net profit was $75.5 million. The quarter experienced a fair value adjustment loss of approximately $120 million from cryptocurrencies [1][2]. - The company is making progress on its key priorities for 2024, focusing on revenue growth through the expansion of derivatives, international markets, and custody services, while also enhancing the utility of cryptocurrencies [3][4]. - Coinbase announced a stock repurchase plan of up to $1 billion, approved by the board in October 2024, allowing for the buyback of Class A common stock without an expiration date [3]. Revenue Breakdown - Trading Business: Q3 2024 retail trading revenue was $480 million, a 27% decrease quarter-over-quarter, with retail trading volume at $34 billion, down 8%. The retail fee rate decreased to 1.42% from 1.80% in Q2 2024, primarily due to increased trading volume in stablecoin pairs and reduced non-retail trading revenue. Institutional trading revenue was $55.3 million, down 13%, with institutional trading volume at $151 billion, a 20% decline [2]. - Subscription and Services: Q3 2024 subscription and services revenue was $560 million, a 7% decrease quarter-over-quarter. Stablecoin revenue was $250 million, up 3%, while blockchain rewards revenue was $160 million, down 16%. Interest and financial fees revenue was $64 million, down 8%, and custody fees revenue was $32 million, also down 8% [3]. Q4 2023 Guidance - For October, the company expects total trading revenue of approximately $190 million and subscription and services revenue between $505 million and $580 million, reflecting certain headwinds, including a 10% decline in the average price of ETH compared to Q3 and market expectations of interest rate cuts. The company anticipates R&D and management expenses between $690 million and $730 million, and sales expenses between $170 million and $220 million [4].