Coinbase Set for Strong Q4 Results, but 2025 Faces Uncertainty Amid Crypto Market Volatility
Coinbase (COIN) is set to report its fourth-quarter earnings after the close of trading on Thursday, with analysts anticipating a significant jump in earnings driven by a strong performance in the crypto market during late 2024.
The crypto exchange is expected to post a revenue of $1.8 billion for Q4, an increase from $1.26 billion in Q3, with earnings per share (EPS) expected to rise to $1.99, up from $0.41 in the previous quarter. The surge in revenue is attributed to a major uptick in trading volume, spurred by a crypto rally following the presidential election.
Analysts expect Q4 trading volume on Coinbase to rise to $195.9 billion, up from $185.3 billion in Q3, marking the strongest quarterly trading volume since Q4 2021.
Citi analysts remain optimistic about Coinbase’s prospects, reaffirming their “buy” rating on the stock and raising their price target to $350 from $275. They believe Coinbase is well-positioned to thrive in the evolving crypto landscape. However, Citi’s forecast for Q4 revenue is slightly lower at $1.7 billion, missing the $1.8 billion consensus estimate.
Similarly, JPMorgan’s Ken Worthington views the election outcome as a key catalyst for the crypto market but remains neutral on Coinbase’s stock. He projects revenue of $1.77 billion for Q4, also falling short of the $1.8 billion consensus estimate.
2025 Outlook: Volatility and Market Risks
Looking ahead to 2025, analysts express caution due to the unpredictable nature of the crypto market. The impact of policy changes, which can take time to materialize, adds further uncertainty to Coinbase’s prospects.
Citi analysts project a 6% year-over-year growth in transaction revenue for 2025, driven by stable crypto prices and more normalized trading volumes. This contrasts with the 3% growth consensus estimate, reflecting optimism about the company’s prospects in the coming year.
However, Citi also notes that Coinbase’s stock is likely to remain volatile, as it is sensitive to broader economic trends and changes in market sentiment. “The next 1-2 years will be formative for Coinbase’s business model, and its success will depend on how it adapts to the rapidly changing digital asset space,” the analysts said.
Diversification of Revenue Remains Critical for Coinbase’s Future
Over the past year, Coinbase has been focused on diversifying its revenue streams, given that trading fees still represent roughly 50% of total revenue. However, retail trading—traditionally a major contributor to higher-fee transactions—has not fully recovered to pre-2021 levels. According to research from Kaiko, retail volume now makes up only 18% of Coinbase’s total volume, down from 40% in 2021.
Citi analysts believe that Coinbase could address this issue by expanding into new areas, such as asset tokenization, smart contract applications, and Web3 technologies. In addition, exploring blockchain’s potential for cross-border payments and using it for AI-driven governance could further diversify Coinbase’s revenue streams and create new growth opportunities.
“Coinbase’s future growth hinges on its ability to unlock the full potential of blockchain technology and capitalize on new use cases, but clearer regulatory frameworks are needed for this to happen,” Citi concluded.
