Benchmark says Coinbase’s soft earnings and stock drop ‘doesn’t matter’ in the big picture

The Block

Aug 05, 2025 08:19:39

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Shares of Coinbase (ticker COIN) sold off more than 15% on Friday after the crypto exchange said revenue fell 26% from the previous quarter. Spot trading volumes and revenue also declined during the fiscal period. While traders dumped the stock, one analyst called the second-quarter results "nothing more than a distraction" from how Coinbase is building a full-scale crypto ecosystem.

Total revenue declined 26%, transaction revenue shrank by 39%, and crypto spot volumes were down by over 30% from the first quarter. Trading volumes came in at $237 billion, compared to $226 billion during the same period in 2024. Meanwhile, Coinbase earned net income of $1.43 billion.

"[T]he near-term softness in the company’s operating metrics that triggered the selloff was noise, while the signal – the various elements of its digital asset platform coming together to position it for long-term revenue growth – tells us it would make a great deal of sense to buy the dip," Benchmark analysts led by Mark Palmer wrote Monday in a note to clients. The firm listed five key reasons for traders and investors to ignore the stock's plunge.

Due to its agreement with Circle Internet Group (ticker CRCL) regarding revenue sharing from USDC, Coinbase is positioned to benefit "significantly" from increased stablecoin adoption following the enactment of the GENIUS Act, the analysts said. They also forecast the enactment of the CLARITY Act, and therefore say Coinbase's crypto prime brokerage platform and its "Crypto-as-a-Service" offering have positioned it to be a primary beneficiary.

The third main reason Benchmark remains bullish on Coinbase is due to the development of a "super app" for crypto that would blend trading, payments, DeFi, NFTs, stablecoins, and developer tools into a single platform. Coinbase plans to also integrate decentralized exchanges into its platform. Along these lines, Bernstein analysts recently likened Coinbase to "the Amazon of crypto financial services."

Finally, Coinbase's projected July transaction revenue would represent a 44% increase from its monthly average transaction revenue during the second quarter, according to Benchmark, which may signal the beginning of a rebound in crypto asset activity.

"With that said, we reiterate our view that investors should be less focused on the company’s short-term operating performance and more on the actions it has been taking to realize CEO Armstrong’s vision of an 'everything exchange' for Web3 and digital assets," they wrote.

In conjunction with the earnings release, Coinbase said it will soon offer tokenized stocks and prediction markets to U.S. users. Coinbase also disclosed it bought 2,509 BTC in the second quarter, bringing the exchange back into the top 10 public bitcoin treasury companies.

Benchmark reiterated a "buy" rating and price target of $421 on COIN shares.

Coinbase's stock closed Monday's session up 1.1% at $318.17 per share, according to The Block's COIN price data.

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