Coinbase analysts split after profit decline, Deribit acquisition
Author: Helen Brown | Edited by: Sheldon Reback Updated: May 9, 2025, 4:25 PM Published: May 9, 2025, 4:04 PM
Wall Street analysts have mixed views on Coinbase (COIN) following a disappointing quarterly earnings report and $2.9 billion acquisition, with some downgrading short-term forecasts while others point to long-term strategic gains.
“First-quarter results were slightly below expectations, with April revenue and volume forecasts impacted by weaker cryptocurrency market conditions and price movements/discounts,” Barclay’s Benjamin Buddish wrote in a report, maintaining an “equal weight” rating. “Other than that, COIN showed good share growth in both spot and futures markets in Q1 and remains bullish.”
The U.S.-based crypto exchange reported a more-than-expected 12% drop in revenue from the previous quarter to $2.03 billion. Transaction revenue fell nearly 19% to $1.3 billion, a worrying sign for the period. Several analysts, including Keefe, Bruyette & Woods and JPMorgan, have cut their revenue forecasts for the second quarter and the full year, citing fee cuts and lower activity from institutional investors.
Retail trading remained stable, but revenue from institutional clients declined. JPMorgan reported a 30% drop in institutional volume revenue from the previous quarter and a decline in institutional fees from 4.1 to 3.1 basis points, driven by incentives, rebates and increased presence of high-frequency traders.
However, the $2.9 billion acquisition of Deribit, the world’s leading crypto derivatives platform, was a bold move towards the future of this market segment.
The deal, which is expected to close by the end of the year, has received positive reviews from Bernstein (with an above-average rating), which described the valuation as fair given Deribit’s $1.2 trillion in annual volume and $30 billion in open interest. Canaccord Genuity (a “buy” rating) said the acquisition would give Coinbase international strength and position it for potential U.S. regulatory approval of crypto options.
Despite the decline in trading revenue, the exchange is relying on other sources of growth. Subscription and services revenue increased 9% to $698 million, helped by the rise in stablecoins. USDC balances on Coinbase increased nearly 50% to $12.3 billion, while balances held off-platform increased 39% to $42 billion.
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