Key Takeaways
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Keefe, Bruyette & Woods cut its Coinbase price target to $221 from $237 on Nov. 3 and kept its Outperform rating. The new target is 56% above the stock price.
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Coinbase stock has fallen 57% in a year, and its third-quarter transaction revenue fell 44% from a year earlier.
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Analysts' 2027 earnings estimate has dropped to $2.47 a share from $3.19 three months ago, and KBW's target works out to 136x next-twelve-months earnings.
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KBW is betting on a crypto trading recovery that the estimates don't show yet, and the fourth-quarter report in February is the next check.
Coinbase Global ( COIN:NASDAQ )has lost 57% of its value over the past year, and Wall Street keeps trimming its targets. On Nov. 3, Keefe, Bruyette & Woods cut its target to $221 from $237 and kept its Outperform rating, still 56% above today's $141.55 share price.
Crypto trading dried up
The slump started with spot trading. Coinbase said in its second-quarter report on July 30 that consumer transaction revenue fell 31% from a year earlier to $451.7 million, as consumer spot volume dropped 38%.
Coinbase didn't turn it around in the third quarter. Revenue for the quarter, reported Oct. 29, was $1.22 billion, just under the $1.23 billion analysts expected, and transaction revenue fell 44% from a year earlier to $590 million. CFO Alesia Haas said on the call that overall crypto spot trading volume fell 10% from the second quarter, and that "the growth in prediction markets offset the decline in overall spot trading."
Then a record $6.3 billion theft at Binance on Oct. 29 hit crypto stocks. On Nov. 2, Morgan Stanley downgraded Coinbase to Underweight and cut its target to $120 from $258.
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KBW is betting on a trading rebound
KBW's Stephen Glagola resumed coverage in late September with a $237 target. He expected stronger crypto trading to lift earnings, with stablecoins, derivatives and prediction markets taking the business beyond spot trades. He also estimated that Coinbase's 2027 adjusted EBITDA would beat consensus by 24% if trading recovers moderately. With the cut, the firm called prediction markets the key growth driver.
Does $221 add up?
The consensus target has nearly halved over the past year, to $199 from $386:
Thirty-eight analysts cover Coinbase, and their targets run from $110 to $280. KBW's $221 is 11% above the consensus, in the upper half of that range.
Analysts have cut their targets because they've cut their earnings estimates. They don't expect Coinbase to earn its 2025 level again until 2028:
And the 2027 estimate is still falling: $2.47 a share now, down from $2.84 a month ago and $3.19 three months ago.
That leaves Coinbase at 85x next-twelve-months earnings, nearly three times its five-year average of 29x:
The multiple is high because near-term earnings are so low: $1.63 a share. KBW's target works out to 136x those earnings. For that to hold up, Coinbase's earnings would have to recover much faster than analysts now expect.
Most of Coinbase's reported profit also came from crypto prices: about $715 million of its $719 million in third-quarter net income was gains on the crypto it holds.
Frankly, KBW is betting on a trading recovery that hasn't shown up yet in the results or the estimates. Until analysts stop cutting their 2027 numbers, I'd treat $221 as the bull case.
Transaction revenue was about $165 million for the fourth quarter through Oct. 25. The fourth-quarter report in February will tell us whether trading picked up from there.
So what is Coinbase stock actually worth?
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