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On paper, Coinbase ticks all the boxes. Reliability, user confidence, quality of service: the platform has established itself as one of the sector's heavyweights. And the figures for the fourth quarter of 2024 bear this out. Total sales of $2.3 billion in Q4 ($6.6 billion for the year) and net income of $1.3 billion in Q4 ($2.6 billion for the year).
Analysts had expected a fine performance, but were treated to a fireworks display. Transaction sales jumped by $572 million to $1.55 billion over three months. The subscriptions and services business, which was supposed to stabilize activity in the face of the crypto rollercoaster, was also a big hit: $641 million, well ahead of forecasts ($505 to $580 million). The trend continues into 2025: as of February 11, Coinbase had already generated $750 million in transactions.
10-K Coinbase
Add to this an adjusted EBITDA of $1.28 billion in the fourth quarter ($3.3 billion for the year), with a solid margin of 58%. The company seems to have found the recipe for turning the crypto craze into cash, while securing its future with less cyclical revenues. The icing on the cake: Coinbase records $404 billion in total assets on the platform - a record. This represents 12% of the crypto market's total market capitalization.
Our Q4 and FY 2024 financial results are now live. pic.twitter.com/R5LuW7pwI9
- Coinbase ?? (@coinbase) February 13, 2025The chink in Coinbase's armor? Its sickly dependence on the rollercoaster ride of crypto cycles. When the market goes wild, it's a great party. But when it falters, revenues plummet. To cushion the shocks, the platform relies on a safety net: subscriptions and services. A more stable source of revenue, less subject to the ups and downs of bitcoin. A reassuring strategy, but one that has yet to prove itself.
But behind the euphoria, two warning signs are flashing.
First, the competition. And why? Because, behind the dazzling figures, lie two pebbles in the shoe: competition and dependence on trading volume.
In the third quarter, the platform traded $185 billion. By the fourth, it was euphoric: 439 billion. But this is not set in stone. If the crypto market takes a breather, if appetite eases, volumes plummet. And with them, revenues. And with them, margins. The domino effect is swift.
And the competition doesn't wait its turn. Today, buying cryptos is no longer reserved for insiders. Mercado Pago (Mercado Libre), Nu Holdings, Inter, Robinhood... Everyone wants a piece of the action. Not to mention the behemoth Binance, which plays in a different league.
Coinbase has the advantage of experience and trust, it's true. But for its current valuation to be justified, growth must continue, quarter after quarter. In a market where everyone wants to become the "gateway to cryptos", attracting new customers and maintaining a high volume of exchanges, while diversifying, is far from an easy task.
Finally, the eternal comparison: why buy Coinbase when you can own bitcoin directly? When we look at performance, the match is decided: bitcoin leads the way.
The two assets are advancing hand in hand - no surprise there. Trading volume on Coinbase often follows the mood of BTC. Even in the fourth quarter, when the platform was touting its diversification, bitcoin still accounted for 27% of volumes (down 10 points on the previous quarter - a surprise).
But the real concern is that this correlation doesn't work in Coinbase's favor. Since its IPO, COIN has lost 9%. Over the same period, bitcoin has soared by +55%. In three years? +127% for BTC, +53% for Coinbase. Over six months, the same trend: +64% for bitcoin, +55% for the share. Only the past year has saved the day, with +102% for Coinbase versus +94% for bitcoin.
MarketScreener
Some might say: Coinbase is a company with cash flow, diversification and the potential to monetize the crypto ecosystem. True, but it's also a company that depends on bitcoin cycles. And therein lies the rub: bitcoin doesn't need Coinbase. Coinbase, on the other hand, hangs on to the fate of BTC.
Buying bitcoin means betting on the asset itself, without the execution or competitive risks faced by Coinbase. The stock, on the other hand, remains sensitive to everything: falling volumes, pressure on margins, new entrants... The opportunity cost is clear.
Coinbase has the potential to free itself from this dependence, notably through subscriptions and services. But for now, the correlation remains strong. And on the balance of returns, bitcoin wins. But Coinbase is looking to the future. And, above all, clearly.
In its latest letter to shareholders, the platform is optimistic: "The era of repression is behind us." Gone are the days when the crypto industry advanced under the threat of the financial gendarmes. Now it's time for construction. A favorable wind that, according to Coinbase, is blowing directly from the White House: the Trump administration wants to make the United States the global hub for digital assets. And elsewhere, the same dynamic is at work: governments are releasing funds and taking the cryptosphere seriously.
Set your sights on 2025. The objective is clear: revenue growth, improved user experience and infrastructure consolidation. In detail, Coinbase is banking on three pillars:
Gaining market share against rivals. Boost the growth of USDC, its stablecoin backed by the dollar, to consolidate its position in the ecosystem. Develop ancillary services such as staking, asset custody and Coinbase One subscription.
The strategy is clear: depend less on the roller-coaster ride of exchange volumes, and secure stable revenue streams. A long-term vision, as America prepares to redraw the rules of the crypto game.
Coinbase's back is solid, its management is making the right decisions, and its future is brightening thanks to its diversification. But the stock remains a bet on the continuation of the crypto bull market. And on this terrain, some prefer to bet directly on digital gold.
