Coinbase(US:COIN) First Shanghai Securities·2024-06-14 01:31Investment Rating - The report initiates coverage with a "Buy" rating and sets a target price of $317.60, representing a potential upside of 24.57% from the current closing price [12][14]. Core Insights - Coinbase Global, the largest cryptocurrency exchange in the U.S., reported Q1 2024 revenue of $1.64 billion, exceeding analyst expectations of $1.34 billion, and achieved a net profit of $1.18 billion, a significant turnaround from a loss of $78.9 million in the same period last year [12][20]. - The revenue is primarily derived from trading, subscription, and service fees, with trading revenue accounting for 65.8% of total revenue, driven by increased market volatility, rising cryptocurrency prices, and a growing user base [12][31]. - The approval of Bitcoin ETFs is highlighted as a significant milestone that could enhance liquidity, expand the user base, and increase market recognition for cryptocurrency exchanges [12][75]. Company Overview - Coinbase was founded in June 2012 and became the first publicly traded cryptocurrency exchange on NASDAQ on April 14, 2021 [12][20]. - The company has a diverse management team with extensive experience in the industry, which is crucial for maintaining its competitive edge [12][30][51]. Financial Analysis - Historical financial data shows a significant recovery, with projected total revenue for 2024 expected to reach $6.41 billion, a 106.28% increase from the previous year [12][15]. - The adjusted EBITDA for Q1 2024 was reported at $1.01 billion, marking a substantial improvement from the previous year's loss [12][20]. Revenue Composition - The revenue structure consists of trading fees (65.8%), subscription services (31.2%), and other income (3.0%), with notable year-over-year growth rates of 187% for trading fees and 41% for subscription services [12][31][53]. Market Position - Coinbase's market position is reinforced by its ability to attract significant institutional investors, with major shareholders including Vanguard Group (6.89%) and Susquehanna International Group (5.06%) [12][14][46]. - The cryptocurrency market is characterized by rapid growth, with Bitcoin and Ethereum dominating the market share, accounting for over 50% of the total cryptocurrency market capitalization [12][83].