Should You Add COIN Stock to Your Portfolio Ahead of Q1 Earnings?
Coinbase Global Inc. COIN is expected to witness an improvement in its top and bottom lines when it reports first-quarter 2025 results on May 8.
The Zacks Consensus Estimate for COIN's first-quarter revenues is pegged at $2.2 million, indicating a 33.4% increase from the year-ago reported figure.
The consensus estimate for earnings is pegged at $2.06 per share. The Zacks Consensus Estimate for COIN's first-quarter earnings has moved 2.4% down in the past seven days. The estimate suggests a year-over-year increase of 23.6%. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)
COIN's Decent Earnings Surprise History
COIN's earnings beat the Zacks Consensus Estimates in three of the trailing four quarters and matched in one, the average surprise being 46.15%.
What the Zacks Model Unveils for COIN
Our proven model does not conclusively predict an earnings beat for Coinbase this time around. This is because a stock needs to have the right combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), which increases the chances of an earnings beat. This is not the case, as you can see below.
You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Earnings ESP: COIN has an Earnings ESP of -5.23%. This is because the Most Accurate Estimate of $1.93 is pegged lower than the Zacks Consensus Estimate of $2.06.
Coinbase Global, Inc. Price and EPS Surprise
Zacks Rank: COIN currently has a Zacks Rank #3.
You can see the complete list of today's Zacks #1 Rank stocks here.
Factors Likely to Shape COIN's Q1 Results
The first-quarter performance of Coinbase is likely to have benefited from increased trading volume due to higher volatility. Crypto trading remains a major revenue driver for COIN. The Zacks Consensus Estimate for trading volume is pegged at 404 million, indicating a 29.4% increase from the year-ago reported quarter. Both consumer and institutional trading are likely to have increased in the to-be-reported quarter.
The intensifying focus on international expansion, growth of derivatives and spot trading and integration of USD Coin into the crypto economy are likely to have fueled the two largest revenue streams — trading fees and Stablecoins.
Higher crypto asset volatility, coupled with improved crypto asset prices, is likely to have driven the growth of Coinbase One subscribers as well as unit inflows across staking, custody, and USDC assets. The Zacks Consensus Estimate for transaction revenues is pegged at $1325 million, indicating an upside of 23% from the year-ago reported quarter.
Coinbase also expects transaction expenses to be in the mid-to-high teens as a percentage of net revenues.
Subscription and services revenues are likely to have been aided by blockchain rewards revenues, Stablecoin revenues and Coinbase One subscription revenues.
A gradual shift to subscription and services revenues, which ensures more stability, from transaction fee revenues is likely to have driven an upside. Coinbase expects first-quarter subscription and services revenues to be in the range of $685-$765 million. The Zacks Consensus Estimate is pegged at $707 million.
Coinbase expects technology and development and general and administrative expenses to be in the range of $750-$800 million, which indicates a rise in variable expenses related to elevated trading volume as well as payroll taxes and headcount.
An increase in digital marketing spending is likely to have increased sales and marketing expenses. COIN projects sales and marketing expense to be between $235 million and $375 million due to potential variability in performance marketing and USDC assets in the product suite.
Technology investments aimed at improving operational efficiency, combined with disciplined cost control, are likely to have led to lower expenses and enhanced profit margins. COIN expects technology & development and general & administrative expenses to increase to $690-$730 million.
COIN's Price Performance & Valuation
The stock underperformed the industry, sector and the S&P 500 in the first quarter of 2025.
The stock is trading at a price-to-earnings ratio of 22.47, higher than the industry's 15.29.
Shares of Robinhood Markets HOOD and Interactive Brokers Group, Inc. IBKR, two other crypto-oriented stocks, are also trading at multiples higher than the industry average.
Investment Thesis
Coinbase looks poised to benefit from higher crypto asset volatility and prices, and increased adoption of its assets in a pro-crypto environment. It has been deepening its roots in international markets. Strengthening banking connections, locking of new licenses and expanding tailor-made product ranges to meet unique customer preferences should help COIN grow rapidly in the long run. A gradual shift to subscription and services revenues from transaction fee revenues is likely to have ensured stability in revenues.
Coinbase has been investing in infrastructure and foundational platforms like Base, designed to optimize Ethereum's infrastructure by increasing the network's speed and affordability. The rise in stablecoin adoption has been driving Stablecoin revenues. The continued growth of Coinbase One subscribers is expected to have further boosted the company's revenues.
COIN remains focused on maintaining a low-cost structure.
However, return on equity, signifying the company's ability to use shareholders' funds to generate returns, compares unfavorably with the industry average.
COIN's debt level has been increasing but compares favorably with the industry average. Also, an improvement in times interest earned, which compares favorably with the industry average, offers some respite. Cash and cash equivalents have been improving.
What Should Investors Do Now With COIN Stock?
The Trump administration is swiftly advancing its efforts to fulfill its vision of establishing the United States as the world's leading hub for cryptocurrency innovation. In a pro-crypto operating environment, COIN, the crypto leader, is poised to gain from its efforts to accelerate growth, increase market share in spot trading on consumer and institutional trading platforms and improve trading experience, along with continued innovation and cost-control initiatives.
However, given its premium valuation and weak return on equity, new investors can wait for some more time before taking a position in the stock.
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