Coinbase's Q4 Surge: $1.8B Revenue, Trump's Win Drives Crypto Rally

Coinbase, the leading cryptocurrency exchange, has reported a strong quarter, with analysts expecting a significant increase in earnings. The company's 2024 Q4 revenue is projected to reach $1.8 billion, up from $1.26 billion in Q3. Additionally, earnings per share are forecast to jump from $0.41 to $1.99, despite a 15% drop in November. Despite slight variations in revenue estimates, analysts agree that Coinbase had a robust quarter.

The focus now shifts to 2025, a year that could shape the company's future in the fast-changing crypto market. While some analysts, like Citi, recommend buying Coinbase stock and have raised their price target, others are more cautious. FactSet predicts Q4 revenue of $1.8 billion, while Citi estimates $1.7 billion. JPMorgan's Ken Worthington is neutral on Coinbase stock, expecting $1.77 billion in revenue, slightly below the average forecast.

One significant factor contributing to Coinbase's success in Q4 was the U.S. presidential election in 2024. President Donald Trump's win sparked a major crypto rally, with trading volume jumping to $195.9 billion in Q4, up from $185.3 billion in Q3. This is the highest quarterly volume since 2021. However, the longevity of this boost remains uncertain, as new regulations may take time to implement, making 2025 more challenging to predict.

Despite the strong Q4 results, Coinbase faces a significant challenge: diversifying its revenue streams. Currently, 50% of its revenue comes from trading fees, making it heavily reliant on market fluctuations. Retail traders, who pay the highest fees, have become less active, with their share of trading volume dropping to 18% from 40%. Crypto research firm Kaiko suggests that this decline negatively impacts Coinbase's earnings. Citi analysts recommend that Coinbase focus more on Real World Asset (RWA) tokenization, smart contracts, Web3, and AI-powered blockchain tools to achieve steady revenue growth.