Summary Coinbase Global's (COIN) launch of crypto-backed mortgages and its 'Everything Exchange' strategy significantly expands its total addressable market and revenue diversification. Despite a recent GAAP net loss and rising operating expenses, the company’s aggressive international expansion and inorganic growth initiatives point toward long-term operating leverage. I think COIN's top-line growth visibility has improved, and the market underappreciates its structural pivot. Analysts project a 24% sales CAGR over the next five years, suggesting that current earnings estimates may underestimate the efficiency gains from Coinbase’s structural pivot. I see at least 15% undervaluation with a $190/share 12-month price target, supported by margin improvement and new product catalysts. Upgrading COIN to My First Ever "Buy" For a few months in 2023, I was bearish on Coinbase Global Inc. 's ( COIN ) prospects, thinking that its business model looked weak and it didn't signal any potential improvement in the next few years. But then I turned neutral in May 2024, when COIN's operations and financials started to outperform my initial expectations. The stock is down by over 19% since that upgrade, and I see an interesting setup going into the next few years amid the latest corporate announcements, like the crypto-linked mortgages and the "everything exchange" pivot that COIN has been going through. The forward-looking valuation setup looks much better now compared to what we could witness a year ago. So, I believe it's time for me to upgrade my rating on COIN once again, this time to a "Buy". Why Do I Think So? Before jumping to the catalysts discussion and the main things that make me more bullish on COIN, let's first take a look at the firm's most recent financials. In the Q4 2025 report, we see that Coinbase showed a net loss of $667 million on a GAAP basis, and the adjusted EPS came in at -$2.49, missing the analysts' expectations quite meaningfully - especially so compared to the previous 2 quarters. Seeking Alpha, COIN's EPS beats/missed The firm's operating leverage reversed: While revenues fell, core operating expenses (mainly T&D and SG&A) surged 14% QoQ to $1.3 billion, and so the adjusted EBITDA margin fell 45% to 33% in Q4. The investors started to worry, and the geopolitical risks have only added fuel to the sell-off fire. As a result, the stock is trading 40%+ below its 200-day simple moving average: TrendSpider Software, COIN daily, notes added The CLARITY Act was another negative that drove down the stock. Traditional banking representatives pushed back against provisions that allow crypto platforms to pay yields on stablecoins, so investors started to question this area of TAM for COIN. Some of them sold the stock to limit risks. coinpedia.org However, the current sell-off has already started to look tempting, in my view, because COIN has gotten a couple of fresh catalysts that might potentially help reverse today's negative sentiment. First, one of the most underappreciated catalysts for COIN to date is the recent launch of crypto-backed mortgages in partnership with direct lender Better Home & Finance: The product enables Americans who qualify for a mortgage with BETR to pledge Bitcoin or Circle Internet Group's ( CRCL ) USDC as collateral to fund their cash down payment. The benefits include if BTC drops in value, the mortgage terms remain unchanged, and no additional collateral is required. Token-backed mortgages let borrowers secure standard conforming mortgages without liquidating tokenized assets or potentially triggering a taxable event. Source: Seeking Alpha News The US housing market is $55.1 trillion in size , based on Zillow, with most of the deals made through mortgage, so it's a massive leap forward for Coinbase's prospective total addressable market, even if the CLARITY Act eats away at some part. As you can see from the above program description that the Seeking Alpha News team provided, the loan mechanics look to be highly favorable to the borrower because there's not going to be the typical crypto volatility risks in lending - homebuyers will be able to pledge digital assets like Bitcoin ( BTC ) with 250% collateral or USDC with 125% collateral to fund their down payment, and borrowers won't need to liquidate their holdings (no capital gains taxes + potential BTC/USDC price appreciations). The liquidation risk is only triggered if a borrower falls 60 days delinquent on their payments. In addition to that, these loans technically comply with the FHFA standards ("Federal Housing Finance Agency"), per some sources , so they're going to be eligible for lower interest rates than standard private cryptocurrency loans - it sounds like a large market that Coinbase can attract plenty of clients and boost its top line massively. Another thing that I view bullishly in COIN's growth story is the strategic "Everything Exchange" transition that began with moving beyond simple spot crypto trading to derivatives, and it's now moving to non-trading activities like prediction markets (and also crypto-backed mortgages that I discussed above). The company is working with the SEC on the tech and frameworks to launch tokenized stocks to remove/limit the custodians and avoid traditional brokers. Now, Coinbase is trying to expand internationally as well, leaning on inorganic growth initiatives. For example, they recently acquired Deribit for $2.9 billion to become the "leading global platform for crypto derivatives," and they're also partnering with Bybit to scale its global presence. So, I see Coinbase gradually moving away from its past dependence on the volatile boom-and-bust cycles of crypto prices - the stock price is still moving largely in sync with Bitcoin, from what I see, but internally, the firm's financials now rely on stocks, prediction markets, and commodities in addition to just stablecoins. The revenue base has widened dramatically, and the TAM has increased, so top-line growth visibility has clearly improved, which is not reflected in the stock's price action because the market seems to be focusing on the short term and past financials right now. As the "Everything Exchange" strategy scales enough, it should logically lead to some operating leverage and hence better margins ahead. If we take a look at today's consensus estimates , we see that Wall Street analysts see the same thing: The 5-year EPS and sales CAGRs are placed at 10.74% and 24%, respectively. While the operating leverage assumption is priced in to some extent here, I believe the FY2028-2029 earnings growth consensus is off, as it simply fails to capture the efficiencies that Coinbase is likely to get from its current initiatives. Seeking Alpha, COIN's EPS consensus I actually agree that it's hard to predict the upcoming years' EPS beats based on the existing EPS beating track record , but I'll assume that the current FY2028 EPS consensus is underestimating the true margins reversal potential and effect of the top-line addition by at least 5-10%. At 30x earnings, with the above-mentioned EPS premium added, I get a 12-month price target of $190/share, which is a 15% upside potential. Technically, any bullish sentiment boost right now can send COIN to the $190-200/share level in the short term, as it seems to be the nearest resistance zone: TrendSpider Software, COIN, notes added Interestingly, most analysts out there predict the PT for COIN at $251/share, expecting a 55%+ bounce from today's levels in the medium term: Seeking Alpha, COIN's Ratings I don't know who's closer to the truth - my conservative output or the analysts' optimistic target - but I think COIN has already reached the point where I can say that I view it through a bullish lens. Where Can I Be Wrong? The risk profile doesn't look good in Coinbase's case, I should be honest here. First, while the firm is actively trying to diversify its business through its "Everything Exchange" strategy, its deteriorating cost control has led to the OPEX boost and earnings erosion in the recent quarter - it brings in some risks that COIN's forward-looking projections will take a hit amid poorer profitability. Second, the CLARITY Act limits COIN's important revenue stream - if the trad banking lobbyists achieve their goal of banning crypto exchanges from paying yields or rewards on stablecoin holdings, the market might want to revise its earnings growth expectations further to the downside. Third, COIN is already valued richly. I took 30x earnings multiple as a target, but it might be too much given the fact that a lot of COIN's peers trade at meaningfully lower multiples these days (especially so following the YTD valuations reset). Seeking Alpha, COIN's peers page If COIN adjusts to 20x earnings, even with the FY2027 premium added to the current consensus, the implied PT would drop to $117.8/share - that's a downside potential of >26%. The Bottom Line Despite the above risks, I like Coinbase's structural pivot to a wider revenue base, which is making it less dependent on cyclical crypto prices and effectively enlarging the addressable market. The recent launch of the Better Home & Finance crypto mortgage is just another sign that COIN is still trying to squeeze as much as possible from its "Everything Exchange" internal transition - the market is hardly pricing this in, I believe, and so the likely scenario is either bullish beats ahead or a repricing of current consensus estimates. In both cases, COIN should benefit. I think the stock is at least 15% undervalued, so I'm raising my rating to "Buy" after the heavy sell-off. Thank you for reading!
