Compass Point downgrades Coinbase on valuation, weak earnings outlook

Investing.com -- Compass Point downgraded Coinbase (NASDAQ: COIN) to Sell from Neutral and cut its price target to $248 from $330, citing an extended valuation despite signs of weakening earnings and a challenging crypto environment.

The firm flagged waning retail interest, weaker-than-expected Q2 results, and soft 3Q guidance, particularly in high-margin recurring revenue lines like subscriptions and custody services.

Subscription and services revenue missed Street expectations by 8% in Q2, with 3Q guidance coming in 5% below consensus.

“We also expect increasing stablecoin competition to weigh on both COIN’s valuations in 2H25,” said Compass Point.

Compass also warned of increased competition from stablecoins and decentralized finance platforms, and noted that Coinbase’s core profit engine, retail trading is increasingly under pressure, even amid a broader crypto bull market.

Coinbase currently trades at 44x annualized 3Q EBITDA forecasts, a level Compass sees as hard to justify if crypto markets continue to decline.

The firm’s revised $248 target is based on a 25x multiple of its optimistic 2026 EBITDA estimate.

“We see limited support for COIN’s valuation if crypto markets sell off further”

The note also highlighted risks from elevated crypto leverage, a potentially delayed CLARITY Act, and the company’s lag in launching stock trading compared to peers like Robinhood (NASDAQ: HOOD) and Kraken.

“While we remain constructive on the current crypto cycle, we expect a choppy 3Q alongside weak August/September seasonality and waning retail interest in crypto treasury sto

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