Coinbase Global, Inc. (COIN, BUY) - 3Q26 Preview: Bitcoin Recovery Leads Trading Volumes; Maintain BUY and $250 PT

Coinbase Global, Inc. (COIN, BUY) - 3Q26 Preview: Bitcoin Recovery Leads Trading Volumes; Maintain BUY and $250 PT

We reiterate our BUY rating and maintain our $250 price target. Bitcoin’s substantial rebound since July reinforces our constructive cycle outlook, even as industry spot trading volumes declined modestly in 3Q. We expect Coinbase to report revenue of $1.19bn, down 3% q/q and 36% y/y, and Adjusted EBITDA of $247mn, up 19% q/q but down 69% y/y. Near-term trading activity remains subdued, but a lag between price appreciation and broader trading participation is consistent with an early recovery. Our BUY thesis remains anchored in the next BTC bull market and Coinbase’s earnings sensitivity to that recovery. Trading volumes remain soft, with Coinbase outperforming the broader market. Industry data incorporated in our model indicate that spot trading volume declined 6.5% q/q to $2.44tn in 3Q, following a roughly 20% decline in 2Q. Coinbase’s tracked spot volume fell only 2% to $140.9bn, suggesting continued share resilience. We forecast transaction revenue of $576mn, down 4% q/q, and subscription and services revenue of $549mn, down 1% q/q and within management’s $500–580mn guidance. Higher crypto prices have yet to translate into a broad recovery in trading activity. The 2022–23 cycle provides a useful precedent for this divergence. Bitcoin bottomed in 4Q22 and had risen approximately 63% by end-3Q23, while COIN shares had gained approximately 112% over the same nine-month period. Yet industry spot volume, after an initial bounce in 1Q23, declined through the following two quarters to $1.18tn in 3Q23. The decisive rebound came in 4Q23, when volume more than doubled to $2.44tn. COIN therefore repriced alongside improving BTC conditions well before the volume recovery became visible. We believe the current gap between prices and activity is consistent with that pattern and does not undermine our BUY thesis. We retain our revenue forecast but lower near-term profitability expectations. Our updated 3Q revenue estimate is essentially unchanged, as a higher assumed retail take rate offsets softer volumes and a modest reduction in subscription and services revenue. We reduce Adjusted EBITDA by 13% from $285mn, primarily reflecting higher sales and marketing expense, now forecast at $244mn versus $214mn previously. Our projected EBITDA margin falls to 20.8% from 24.0%, while remaining above 2Q’s 17.0%. CLARITY’s setback complicates timing, while the broader regulatory direction remains constructive. The Senate’s September 15 procedural vote failed 49–50, underscoring the difficulty of securing passage. However, the bill’s earlier 15–9 bipartisan approval in the Senate Banking Committee demonstrates a foundation for market-structure reform. The SEC’s crypto-asset interpretation, joined by the CFTC, also represents progress toward clearer treatment of digital assets. We continue to expect greater U.S. regulatory clarity over time, while recognizing that the legislative path remains uneven. A broader product offering could increase Coinbase’s participation in the next cycle. Equity trading expands customer engagement beyond crypto, while prediction markets provide another source of transaction revenue. Coinbase now offers stock trading to U.S. customers, and prediction-market revenue grew 106% q/q in 2Q, exceeding $100mn on an annualized basis. These products broaden acquisition channels and create more opportunities to retain customer assets and activity. If our anticipated crypto bull market develops, Coinbase could capture more users and a greater share of their crypto and non-crypto trading than in the previous cycle.