Coinbase, double challenge with bitcoin Etf's and broker Robinhood

On the one hand to counter the increasingly fierce competition. On the other hand, continuing to diversify the business. These are among the focuses of Coinbase Global to support the business. Yes, business. Regarding it precisely the greater articulation of the business - also to reduce the dependence on bitcoin & co - is a primary goal. Is the target reached? The answer is essentially positive, and to realise this, one should look at the dynamics of revenues over time.

The company divides its turnover into two major areas: revenues from token transactions and those generated by subscriptions and services. On the first front are commissions on the transactions of the consumer customer (in turn divided between simple and more experienced users) and, then, of institutional investors. In the second area, on the other hand, various situations are covered: from the subscription to the retail platform (Coinbase One) to the margins generated by the stablecoin Usdc to the custody of crypto assets and staking services. Not forgetting, finally, institutional financing and solutions for the IT development of functionalities to be included in possible crypto projects of customers.

Well: compared to such a breakdown, the following dynamics can be observed. In 2020 (total revenue at USD 1.14 billion), 96% of sales were generated by transaction revenue. In particular, the overwhelming majority came from retail (1.04 billion). By contrast, revenues from subscriptions and services were non-existent (45 million). In 2021 - in the wake of the bitcoin leap - there is the upward leap in total revenues to 7.35 billion. The increase, although Subscription and services comes to half a billion, is still due to consumer transactions (6.5 billion fees on trading). In 2022, on the other hand, we witness - at the same time as the 'winter' season for the crypto queen begins - the collapse of overall turnover (3.15 billion). The thud, however, is counterbalanced by the continued expansion of subscriptions and services. A trend that - unrelated to consolidated revenues - continued in the following years. The division in question rose in 2023 and 2024 to USD 1.4 billion and USD 2.3 billion, respectively. Against this trend, in the past year, transactional revenues accounted for 60.6 per cent of the overall revenue, while Subscriptions and Services reached 35 per cent of the total. In short: the numbers signal, on the one hand, that Subscriptions and Services has started to play an important role in the business; and, on the other hand, that revenues - as transaction fees are volatile and tied to the mood of bitcoin & co - have become more stable and visible. Overall - is the experts' indication - this is a positive development. Just as the last quarterly report was positive. The group increased both revenues and profitability. Net revenues in the fourth quarter were USD 2.2 billion (compared to USD 905 million a year earlier). Net profit, for its part, came in at 1.3 billion (it had been 273 million in the same period of 2023). Finally: earnings per share. This amounted to $4.68. These numbers are often higher than the consensus. According to Facset, for instance, EPS was expected at $2.11.

All as easy as drinking a glass of water, then? The reality is much more problematic. Above all, on the stock market performance front. Coinbase, listed on the Nasdaq, in the last year - for example - has fallen by over 30% while bitcoin has risen by around 20%. True! Over the two-year period, the exchange has gained more than 190%. And yet, the direct listing price on the Nasdaq - on 14/4/2021 - was $250. That is: a higher value than today. In the meantime, the queen crypto - between peaks and troughs - has risen more than 33%. Put differently: the positive correlation between bitcoin and Coinbase exists. But, as a source of this, the saying that bounces around the trading rooms can be quoted: while Coinbase depends on the bitcoin cycle, the latter does not depend on Coinbase.

That being said, in order to better understand the group's market dynamics, it is useful to look at the last 12 months. The company's fundamentals - in fact - are positive and business diversification is increasingly concrete. However, the stock market performance has not been up to scratch. Why? With reference to much of 2024, it must be remembered that, during the last phase of the Biden administration, the Sec, chaired by Gery Gensler, had put the centralised trading platform in its sights. A context of investigations and accusations - to which CEO Brian Armstrong reacted harshly - which clearly did not help the stock on the stock exchange. Now, with the arrival of Donald Trump in the White House, the scenario has changed. The Sec charges have been dropped and the environment is favourable. Yet, performance on the Nasdaq still lags.