COIN plunged 17% on Friday, just a day after Coinbase posted mostly disappointing earnings results.
But investors shouldn’t rush to sell shares of the company’s stock just yet, according to several analysts.
The U.S. crypto exchange’s shares could gain ground again as it closes several strategic partnerships and acquisitions that stand to broaden its customer base for its growing crypto and non-crypto services, according to these analysts.
Those deals should enable Coinbase to post stronger financial results in subsequent quarters, offsetting the negative impact of the company’s lower-than-expected revenue and weaker trading volumes for the second quarter on its stock price, they added.
COIN finished Friday trading at $314.69, about 25% below its 52-week high of $419.78 reached in July, Yahoo Finance data shows.
The decline came a day after Coinbase clocked $1.5 billion in total revenue, or 6% less than analysts’ estimates, according to the company’s latest financial report. Its adjusted earnings (ebitda) were $512 million in the same period, down 13% from the second quarter of 2024.
Coinbase’s lackluster financial results coincided with a drop-off in cryptocurrency trading volumes as the Iran-Israel conflict came to a head and U.S. President Donald Trump’s back-and-forth tariff talks stoked investor jitters. But, the trading platform also reported a few silver linings in its latest report that could position the exchange to see significant revenue growth in the near future. Bernstein analysts highlighted those initiatives in a note dated July 31.
For starters, Coinbase acquired crypto-focused derivatives exchange Deribit, which will allow the platform to roll out perpetual futures in the U.S. and capitalize on the highly profitable derivatives market, the analysts noted.
“This should drive improved trading volumes in H2-already reflected in guided July transaction revenues,” Bernstein analysts said in their note.
They added that Coinbase recently unveiled its plans to become an “everything exchange” that would enable betting on real-world events and trading tokenized real-world assets, equities, derivatives, and early-stage token sales—a major expansion beyond the firm’s core services.
The initiative would diversify the crypto exchange’s revenue, potentially reducing the effect of crypto trading volume dips on Coinbase’s revenue during downturns in the digital asset market, Bernstein analysts noted.
In a note dated August 1, H.C. Wainwright & Co. analysts also pointed to Coinbase’s recent partnership with J.P. Morgan, the U.S.’ largest bank, as another bright spot in the company’s second-quarter report.
Under the agreement, JPMorgan Chase clients will be able to link their Chase accounts to Coinbase to fund their accounts on the crypto exchange, which could boost Coinbase’s customer base and ultimately bolster its bottom line. And using Base, Coinbase’s decentralized network, customers will also be able to exchange their Chase rewards points for Circle’s USDC stablecoin.
“Recently announced partnerships with some of the largest U.S. banks to materially accelerate crypto adoption,” could expand Coinbase’s main line of business, H.C. Wainwright & Co analyst said in the note.