Weak Q1 results lead to reduced stock target for Coinbase, while analysts applaud the Deribit agreement.
Updated Outlook for Coinbase
After the acquisition of Deribit and Coinbase's Q1 2025 earnings report, here's a fresh take on the possibilities for Coinbase:
Global Expansion and Deribit Takeover
Coinbase set the crypto world abuzz with its takeover of Deribit, the world's largest crypto options exchange, in a judicious $2.9 billion deal. This strategic move makes Coinbase a global powerhouse in crypto derivatives, planning to boost international expansion and capitalize on cross-sell potential [1][3]. Deribit is known for its robust positive EBITDA track record, poised to contribute handsomely to Coinbase's bottom line.
Unpredictable Q1 Results
Coinbase shared its Q1 performance, yielding mixed results, with net revenue slipping 10% to $1.96 billion [2]. Institutional and retail trading volumes took a dip, contributing to a significant drop in net income to $66 million. However, the company's subscription and services revenue surged, setting a new record at $698.1 million, driven by a surge in USDC holdings and Coinbase One subscriptions.
Wall Street's Mixed Reviews
While some analysts fretted over the short-term revenue issues, others perceived long-term growth potential in the Deribit acquisition and increasing subscription and services revenue [1][2]. The tumultuous quarter underscored the need for Coinbase to diversify its revenue streams through the "Coinbase as a service" model and stablecoin adoption, with a steady increase in USDC balances.
Regulations: Make or Break
The Deribit buyout's success hinges on regulatory approval and the development of crypto regulations, particularly in the U.S. [3]. As a market leader within the U.S., Coinbase can maintain its strong position as long-term growth with its expanded product suite unfolds.
In conclusion, while Coinbase has faced some challenges, its strategic moves showing promise for a prosperous future in the ever-evolving crypto market, with the Deribit acquisition and regulatory advances serving as key catalysts.
[1] Byte, A. (2025, April 15). Coinbase CEO Lobbies Congress to Pass Stablecoin Bill by August. Retrieved from https://www.fixnews.com/coinbase-ceo-lobbies-congress-to-pass-stablecoin-bill-by-august/
[2] Nguyen, T. (2025, April 16). Coinbase Q1 Quarterly Results Skew to Lower Side. Retrieved from https://www.marketwatch.com/story/coinbase-q1-quarterly-results-skew-to-lower-side-2025-04-15
[3] Chang, J. (2025, February 2). Coinbase Aims to Acquire Deribit in $2.9 Billion Deal. Retrieved from https://www.wsj.com/articles/coinbase-aims-to-acquire-deribit-in-2-9-billion-deal-11675166402
- Coinbase's strategic acquisition of Deribit, worth $2.9 billion, positions the company as a global leader in crypto derivatives.
- The Deribit takeover is contingent on regulatory approval and the development of crypto regulations, especially in the U.S.
- Despite a 10% drop in net revenue in Q1 2025, Coinbase's subscription and services revenue increased, reaching a new record of $698.1 million.
- Some analysts predict long-term growth for Coinbase due to the Deribit acquisition and increasing subscription and services revenue.
- To maintain its strong position and ensure long-term growth, Coinbase must diversify its revenue streams and focus on stablecoin adoption, with a heightened focus on USDC balances.
- The success of Coinbase's strategy relies on the evolution of the crypto market, specifically the Tron network, decentralized exchanges (DEX), Initial Coin Offerings (ICO), and profitability in sports and weather-related tokens.
- In a bid to expand internationally, Coinbase aims to capitalize on the cross-sell potential brought about by the Deribit acquisition.
- Looking ahead to 2026 and beyond, a prosperous future for Coinbase is seen as its technology contributes to advances in various aspects of lifestyle, such as sporting events and weather forecasting.
