With cryptocurrency price volatility and trade revenue expected to fall, here’s Morningstar’s take on Coinbase’s earnings and stock. While Coinbase’s fourth-quarter results were better than we feared, the firm still faces major headwinds from the collapse in cryptocurrency prices, which pressures its trading, staking, and custody businesses. The bottom line: Returning to no-moat-rated Coinbase after earnings, we are decreasing our fair value estimate to $160 from $188. We see the shares as fairly valued after a significant rally in response to fourth-quarter earnings.
The decrease in our fair value estimate primarily comes from a significant reduction in our near-term trading revenue projections. Cryptocurrency prices have seen a material correction in recent months, with total market capitalization falling more than 45% from the October peak. We expect trading revenue to decrease 20.6% in 2026 and to not fully recover until 2028. This decrease is only partially offset by high subscription and service revenue, which we expect to increase 14% next year, mostly thanks to the firm’s stable coin business.
Big picture: While Coinbase is still highly exposed to cryptocurrency prices, the firm has had significant success in reducing that exposure by growing its recurring revenue sources and diversifying its business. While we project another significant decrease in earnings, we expect the firm to remain profitable—a welcome change from the last crypto winter in 2022, when the firm suffered dramatic losses. With its 3-star rating, we believe Coinbase stock is fairly valued compared with our long-term fair value estimate of $160 per share, which translates to 71.8 times our 2026 earnings projection and is heavily depressed by the recent collapse in cryptocurrency prices.
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