Coinbase Global (NASDAQ:COIN) experienced a surge of 16% during Wednesday’s trading and has risen nearly 20% over the course of the past week. This increase follows the approval of the highly awaited stablecoin regulation bill by the Senate. Stablecoins are a type of cryptocurrency designed to maintain their value against fiat currency such as the U.S. dollar. This legislation represents a significant victory for the cryptocurrency industry, as it establishes a framework to regulate digital tokens tied to the U.S. dollar’s value, with requirements for issuers that include full reserve backing, monthly audits, and compliance with anti-money laundering laws. These measures could help legitimize cryptocurrencies further and promote broader mainstream acceptance.
Coinbase stands to gain from this regulation in several ways. Stablecoins are Coinbase’s second-largest source of revenue, following its primary crypto trading operations. Importantly, Coinbase co-founded USD Coin (USDC), a widely used stablecoin, and receives a 50% share of the profits generated by its issuer, Circle, from the cash and bond reserves that back USDC, after costs. On Wednesday, Coinbase introduced Coinbase Payments, a new feature that enables online retailers to accept USDC. E-commerce giant Shopify is an early collaborator, facilitating USDC payments alongside fiat payouts. By making crypto payments easier, Coinbase aims to establish USDC as a standard online payment option for businesses, marketing it as a quicker and more affordable alternative to credit cards.
Even with the positive news in recent days, Coinbase stock is not an unequivocal buy. Why is this so? Although the company boasts a very strong operational performance and solid financial health, its valuation is quite steep, and the stock has shown considerable volatility. Nevertheless, for those seeking upside potential with less volatility than individual stocks, the Trefis High Quality portfolio offers an alternative – it has outperformed the S&P 500 and yielded returns exceeding 91% since its inception.
How Does Coinbase Global’s Valuation Look vs. The S&P 500?
When considering the cost per dollar of sales or profit, COIN stock appears to be expensive in comparison to the wider market.
• Coinbase Global has a price-to-sales (P/S) ratio of 9.5 compared to 3.1 for the S&P 500
• Furthermore, the company’s price-to-free cash flow (P/FCF) ratio stands at 33.7, in contrast to 20.9 for the S&P 500
• Additionally, it has a price-to-earnings (P/E) ratio of 45.0 compared to the benchmark’s 26.9
How Have Coinbase Global’s Revenues Grown Over Recent Years?
Coinbase Global’s Revenues have increased significantly over recent years.
• Coinbase Global has witnessed its revenue increase at an average rate of 18.6% over the last three years (compared to a rise of 5.5% for the S&P 500)
• Its revenue has risen by 75.2%, from $4.0 billion to $7.0 billion in the past twelve months (versus growth of 5.5% for the S&P 500)
• In addition, its quarterly revenue increased by 24.2%, reaching $2.0 billion in the most recent quarter from $1.6 billion a year prior (contrasting with a 4.8% improvement for the S&P 500)
How Profitable Is Coinbase Global?
Coinbase Global’s profit margins are significantly higher than those of most companies in the Trefis coverage universe.
• Coinbase Global’s Operating Income over the last four quarters amounted to $2.3 billion, reflecting a high Operating Margin of 33.0%
• Coinbase Global’s Operating Cash Flow (OCF) during this time was $2.0 billion, indicating a high OCF Margin of 28.2% (versus 14.9% for the S&P 500)
• For the last four-quarter period, Coinbase Global’s Net Income stood at $1.5 billion – suggesting a high Net Income Margin of 21.1% (compared to 11.6% for S&P 500)
Does Coinbase Global Look Financially Stable?
Coinbase Global’s balance sheet appears very robust.
• Coinbase Global’s total debt was $4.3 billion at the conclusion of the most recent quarter, while its market capitalization is $75 billion (as of 6/18/2025). This gives rise to a strong Debt-to-Equity Ratio of 6.5%(in contrast to 19.4% for S&P 500). [Note: A lower Debt-to-Equity Ratio is preferable]
• Cash (including cash equivalents) constitutes $10 billion of the $22 billion in Total Assets for Coinbase Global. This results in a very strong Cash-to-Assets Ratio of 46.7%
How Resilient Is COIN Stock During A Downturn?
COIN stock has performed worse than the benchmark S&P 500 index during certain recent downturns. Concerned about the effect of a market crash on COIN stock? Our dashboard: How Low Can Coinbase Global Stock Go In A Market Crash? provides a comprehensive analysis of the stock’s performance during and after prior market crashes.
Inflation Shock (2022)
• COIN stock dropped 90.9% from a peak of $357.39 on 9 November 2021 to $32.53 on 28 December 2022, in contrast to a peak-to-trough decline of 25.4% for the S&P 500
• The stock has yet to rebound to its pre-Crisis peak
• The highest price the stock has reached since then is $343.62 on 8 December 2024, and it currently trades around $295
Covid Pandemic (2020)
• COIN stock fell 35.5% from a peak of $342.00 on 16 April 2021 to $220.61 on 19 July 2021, compared to a peak-to-trough drop of 33.9% for the S&P 500
• The stock fully recovered to its pre-Crisis high by 3 November 2021
In summary, despite its strong growth, profitability, and financial solidity, COIN’s weak downturn resilience and elevated valuation make it a stock that is attractive yet volatile and challenging to purchase.
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