Coinbase(US:COIN) First Shanghai Securities·2025-05-26 16:00Investment Rating - The report assigns a "Buy" rating for Coinbase Global (COIN.O) with a target price of $305.00, representing a potential upside of 15.90% from the current price of $263.16 [1][2]. Core Insights - The report emphasizes Coinbase's diversified revenue structure and long-term vision as key drivers for sustained growth. The company is expected to benefit from being included in the S&P 500 index, which will enhance liquidity and attract passive fund inflows [4][44]. - The report highlights significant growth in subscription and service revenues, driven by stablecoin USDC, despite a decline in trading revenues. The acquisition of Deribit is seen as a strategic move to fill product gaps in the derivatives market [4][41]. Financial Performance Summary - Revenue Projections: Expected revenues for 2023 are $3.109 billion, with a projected growth of 111.16% in 2024, followed by steady growth in subsequent years [3][46]. - Net Income: The net income is projected to rise significantly to $2.579 billion in 2024, before experiencing a decline in 2025 [3][46]. - Earnings Per Share (EPS): Adjusted EPS is forecasted to be $9.48 in 2024, with a subsequent decline in 2025 [3][46]. - Operating Expenses: Total operating expenses are expected to increase from $3.270 billion in 2023 to $4.733 billion in 2025 [46]. Revenue Breakdown - Total Revenue: In Q1 2025, total revenue was reported at $2.034 billion, with a year-over-year growth of 24.23% [4][9]. - Trading Revenue: Trading revenue for Q1 2025 was $1.262 billion, reflecting a decrease from the previous quarter [4][9]. - Subscription and Service Revenue: This segment reached a record high of $698 million in Q1 2025, primarily driven by USDC revenue [4][9]. Strategic Developments - Acquisition of Deribit: Coinbase's acquisition of Deribit for $2.9 billion is aimed at enhancing its derivatives trading capabilities and expanding market share [4][41]. - Regulatory Environment: Positive regulatory developments, including the dismissal of a lawsuit by the SEC and bipartisan support for stablecoin legislation, are expected to create a more favorable operating environment for Coinbase [4][9]. Market Position - Coinbase holds a 66% market share in the U.S. cryptocurrency exchange market, positioning it as a primary beneficiary of supportive U.S. policies for the crypto industry [44].