Coinbase Shares Surge 48% on Bernstein's Bullish Outlook

Coinbase shares experienced a significant boost on Wednesday following an upgrade from brokerage Bernstein, which raised its price target for the stock to $510. This new target is the highest among analysts, reflecting Bernstein's view that Coinbase's diverse offerings across trading, custody, stablecoins, and blockchain infrastructure are unmatched in the market.

Bernstein reiterated its "Outperform" rating on Coinbase, emphasizing that the company is "the most misunderstood" in the cryptocurrency sector. The firm's analysts, led by Gautam Chhugani, highlighted Coinbase's unique position as the only crypto company in the S&P 500, its dominance in the US crypto trading market, and its leadership in stablecoin business and institutional crypto services.

Bernstein's new price target represents a potential upside of nearly 48% from current levels. The firm detailed how Coinbase's evolution from a retail exchange to a "crypto universal bank" is being underestimated by investors. Despite multiple growth levers, consensus remains bearish on the largest crypto universal bank. While trading remains a core revenue driver, Coinbase’s non-trading income, including stablecoin interest, institutional custody, and staking, made up 42% of total revenue in 2024, up sharply from 14% in 2020.

Bernstein now forecasts Coinbase will generate $9.5 billion in revenue in 2025, climbing to $12.7 billion in 2026 and reaching $14.1 billion by 2027. The projected growth is fueled by rising activity in both trading and expanding non-trading segments such as staking and stablecoin-related services.

Last week, Coinbase’s shares rallied, fueled by the Senate’s passage of the GENIUS Act, a bill that establishes federal oversight for US dollar-pegged stablecoins. Analysts expect the legislation, along with the upcoming CLARITY Act, to benefit Coinbase significantly as a regulatory-compliant market leader. Stablecoins have become Coinbase’s biggest revenue driver after trading, with stablecoin-related income surging 50% year-over-year in the first quarter.

Bernstein raised its 2027 earnings estimate for Coinbase by 28% to $20.38 per share, attributing the revision to stronger operating leverage and expanding product lines. It now values the stock at 25 times projected 2027 earnings, up from its prior 21x multiple. Despite some analyst concerns around competitive pressures, Coinbase’s spot trading share rose to 7.8% in Q1, up from 7.2%, and its retail take rate remained steady at 140 basis points, suggesting customer trust outweighs lower pricing from rivals.

Bernstein's analysis underscores several factors contributing to Coinbase's misunderstood status. Despite prevailing market skepticism regarding its growth potential, Bernstein believes that Coinbase stands to benefit significantly from regulatory clarity and legislative support. The firm's positive outlook is further bolstered by Coinbase's recent financial performance and strategic acquisitions. For instance, Coinbase reported $2 billion in total revenue for the first quarter of 2025, with an adjusted EBITDA of $930 million. The company's acquisition of Deribit, a leading crypto derivatives platform, has enhanced its profitability and trading revenues, making it the number one crypto derivative platform globally by open interest.

Coinbase's USDC stablecoin has also reached a market cap all-time high of $60 billion, with an average USDC held in Coinbase products increasing by 49% quarter over quarter. This growth in stablecoin usage reflects the increasing trust and adoption of Coinbase's services. Additionally, the company has expanded its international presence by securing new licenses in fast-growing crypto markets, further solidifying its position as a global leader in the cryptocurrency industry.

However, the firm also acknowledges certain challenges faced by Coinbase. Transaction revenue declined by 19% quarter over quarter, with consumer trading volume down 17% and institutional trading volume down 9%. These declines can be attributed to broader market trends and macroeconomic uncertainties. Coinbase is also offering trading rebates and incentives to build liquidity in its derivatives trading business, which has negatively impacted transaction revenue. Despite these challenges, Bernstein remains optimistic about Coinbase's long-term prospects, citing the company's strong financial performance, strategic acquisitions, and regulatory support as key drivers of future growth.