Coinbase Stock Analysis: Is COIN a Buy or Sell?

PUBLISHED Apr 29, 2025, 11:28:46 PM        SHARE

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Coinbase (NASDAQ: COIN) surged 10% in pre-market trading to $235 per share, tracking Bitcoin’s price movement. Bitcoin itself spiked 10% on Sunday, currently sitting at $93,000. Given this correlation, let’s analyze Coinbase’s financials, valuation, and determine whether it’s a buy or sell.

Coinbase vs. Bitcoin: Price Trends

Coinbase went public in 2021 at $350 per share but subsequently dropped 80-90% to lows of $33. Over the past year, COIN has remained relatively flat, down 5%, despite tracking Bitcoin closely. Bitcoin surged 50% in the past six months, while Coinbase has shown a similar trajectory, albeit with slightly greater volatility. Over five years, Bitcoin is up nearly 1,000%, whereas Coinbase remains below its IPO price.

For investors bullish on Bitcoin, it may be more strategic to invest in Bitcoin directly rather than Coinbase stock.

Fundamental Analysis of Coinbase

  • Current Price: $215 per share
  • Market Cap: $54 billion
  • P/E Ratio: 22.7 (compared to a market average of ~30)
  • EPS: $9.48
  • Beta: 3.61 (high volatility, mirroring crypto movements)
  • Analyst Target Price: $330 per share
  • Dividend: None

Revenue Growth & Profitability

Coinbase’s revenue has doubled from 2022 to 2023, recovering from 2021 highs. The company is profitable again, generating $2.6 billion in net income and $2.56 billion in free cash flow. Additionally, Coinbase has minimized capex spending to maximize free cash flow, suggesting a strategic focus on financial efficiency.

However, Coinbase has been issuing more shares, potentially diluting shareholder value.

Stock Valuation: Discounted Free Cash Flow Model

Applying the Discounted Free Cash Flow (DCF) model, we estimate COIN’s fair value:

  • Expected Revenue Growth: Modest increase (Analysts expect declining revenues)
  • Margins: Averaging ~41%
  • Weighted Average Cost of Capital (WACC): 20% (unusually high)
  • DCF Valuation: $144 per share
  • Ben Graham Formula Valuation: $64 per share

Based on these models, Coinbase appears overvalued, with analysts forecasting flat or negative revenue growth in upcoming years.

Comparable Company Analysis

While Coinbase is unique, comparing it to similar fintech and crypto-related companies provides insight:

Metric Coinbase (COIN) Robinhood (HOOD) Riot Blockchain (RIOT)
Enterprise Value Largest Mid-sized Smaller
Revenue Highest Lower Lower
Profitability Profitable Unprofitable Fluctuating
P/E Ratio Low N/A High
PEG Ratio Very low N/A High

Coinbase ranks well on profitability and valuation, but given its dependence on Bitcoin’s price movements, direct investment in Bitcoin may be a better alternative.

Final Verdict: Should You Buy Coinbase Stock?

Coinbase has solid financials, profitability, and favorable analyst ratings, but it tracks Bitcoin’s performance closely. Over the last year, Coinbase has remained flat while Bitcoin surged 50%. Over five years, Bitcoin is up 1,000%, whereas Coinbase remains below IPO levels.

If you believe in Bitcoin’s long-term growth, direct investment in Bitcoin may be the better strategy.

Investment Takeaway

  • COIN is financially stable but highly correlated with Bitcoin
  • Overvalued based on DCF and intrinsic value models
  • Comparable stocks suggest fair valuation but limited independent upside
  • Investors bullish on crypto should consider Bitcoin itself over Coinbase

📌 Final Thought: While Coinbase may provide exposure to the crypto market, direct investment in Bitcoin could yield superior returns. Investors should weigh Coinbase’s stock against Bitcoin’s price trajectory before making a decision.

Would you like additional insights, such as risk factors or long-term catalysts for Coinbase? 🚀

https://youtu.be/0PBgk4TTo2Q?si=bhA4cWVI2cSCtAcN



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