Summary Coinbase is well-positioned in the massive stablecoin opportunity, with regulatory clarity unlocking significant growth potential. USDC, co-founded by Coinbase and Circle, is poised to benefit from stablecoin market expansion to $3-4 trillion by 2030. The crypto exchange should beat Q2 estimates due to higher crypto prices, led by bitcoin topping $100K again. Coinbase's acquisition of Deribit, strong Q2 outlook, and positive legislative momentum support continued upside for the stock. As pointed out back in early April, Coinbase Global, Inc. ( COIN ) was a buy with the crypto reset near complete when bitcoin slipped to $80K. A couple of months later, the stock is back running towards the highs on positive legislation and higher crypto prices. My investment thesis is still Bullish on the stock due to the massive stablecoin opportunity being unlocked. Source: Finviz Stablecoin Boom Ahead The U.S. government appears on the verge of establishing rules regarding stablecoin usage. The GENIUS ACT was passed by the Senate and now needs the House of Representatives to pass in order to boost the legitimacy of the crypto industry and provide guardrails on stablecoins by requiring full reserve backing by U.S. dollars and Treasury bills, monthly audits and consumer protections. Stablecoin offers the opportunity to transact in secure digital assets, bypassing the current financial systems with high costs and slow transaction settlements. The biggest issue has been regulatory uncertainty, now possibly on the path of being resolved. In connection with Circle Internet Group ( CRCL ), Coinbase is already in control of the 2nd largest dollar-backed stablecoin, with USDC having $60 billion in assets. Tether is the largest stablecoin at $156 billion, and the company generates billions in annual profits . Source: CoinMarketCap Tether and USDC are both 10x the size of the other stablecoins. These 2 coins have huge first mover advantages to take advantage of market growth, while competition is only looking at launching new stablecoins. The stablecoin market is expected to rise more than tenfold by 2030 to between $3 trillion and $4 trillion , up from only ~$250 billion now. Per analysts at Citizens JMP, stablecoins offer the potential for opening up $100 billion in annual revenue for issuers. In Q1, Coinbase generated $298 million in stablecoin revenue, up 32% YoY. The company reported $171 million in revenues from off-platform USDC assets of $42 billion. Source: Coinbase Q1 2025 Shareholder Letter The crypto firm is already jumping into using USDC for payments and collateral for futures trading. In theory, the stablecoin market increase would drive the current $1+ billion annual revenue run rate to over anywhere from $10 to $15 billion by 2030 alone. More importantly, fees tied to payments and other usage cases would drive more consistent revenues versus crypto trading transactions reliant on crypto prices. New regulations should bring larger players into the stablecoin market, whether large financial institutions, tech companies and smaller financial services firms like SoFi Technologies ( SOFI ) and Robinhood Markets ( HOOD ), after PayPal Holdings ( PYPL ) had already launched the PYUSD stablecoin. Big Quarters Ahead As predicted, Coinbase provided tepid guidance for Q2 when the company reported in early May. The subscription and services revenue was targeted at $680 million or below, after reporting nearly $700 million in Q1. Source: Coinbase Global Q1 2025 Shareholder Letter Naturally, Bitcoin prices have soared back above $100K, leading to the stock rally prior to the positive stablecoin news. Coinbase should actually report a strong quarter compared to targets. Analysts currently forecast Q2 revenues of only $1.7 billion. Coinbase should maintain revenues closer to the $2 billion range in Q1, unless seasonal volumes limit transactions during the Q2/Q3 period. Data by YCharts Also, Coinbase is acquiring Deribit for ~$2.9 billion, comprised of $700 million in cash and 11 million shares of Coinbase common stock. Considering the company has a market cap of $75 billion with 271 million shares outstanding, the dilution is nearly immaterial, and the company has USD resources of nearly $10 billion to easily pay the cash portion. The stock faces some resistance between $300 and $340, but all of the positive legislation in stablecoin and the move into crypto derivatives and the EU license to operate a crypto exchange are huge positives. Coinbase has an EV of ~$69 billion with the net cash position of $6 billion, leaving the stock only trading at ~8x sales targets of $8 billion. The key is that Coinbase has substantial revenue upside in the years ahead after being stuck in the current revenue range due to volatile crypto trading. The big risk is the U.S. House failing to approve the GENIUS Act, leading to lower crypto prices and trading. The stock quickly becomes very expensive without a revenue boost from higher crypto prices, further boosted by more stablecoin revenues in the years ahead. If the stock doesn't hold the rally today above $300, investors might want to dumb Coinbase on the negative signal. Takeaway The key investor takeaway is that Coinbase is seeing massive catalysts for the business. Investors hopefully bought at the lows back in April and can use $300 as a key price for buying more shares.
