Investing.com -- Argus cut its rating on Coinbase to Hold from Buy, saying the crypto exchange’s valuation has moved too far ahead of traditional exchange operators even as earnings continue to improve.
Coinbase trades at 39 times its revised 2026 EPS estimate, well above the 24 to 27 times range for ICE, Nasdaq, CME and Cboe. Argus analyst said it would look to restore a Buy rating when the multiple comes closer to those peers.
USDC continued to expand with its market value topping $74 billion. Coinbase also gained share in global spot and derivatives trading and saw all-time highs in derivatives activity on its international platform. Consumer trading volume rose 45% while institutional volume climbed 56%.
The brokerage said Coinbase’s push to broaden its business adds long-run potential, including its effort to become an Everything Exchange with more than 300 listed assets and integrated decentralized trading.
The company is also building its derivatives business through new perpetual futures in the U.S. and the planned purchase of options exchange Deribit. Longer term, Coinbase aims to support tokenized equity trading.
Though analyst cited risks tied to volatility in crypto assets, rising expenses from investment and hiring, and a sharp share-price selloff since mid October as bitcoin declined. Coinbase expects subscription and services revenue of $710 million to $790 million in fourth quarter and anticipates higher technology and development spending.
Coinbase posted third quarter EPS of $1.50, up from $0.28 a year earlier and above the $1.10 consensus. Revenue rose 55% to $1.9 billion, lifted by higher subscription and services income tied to growth in average USDC balances and blockchain rewards. Net income was $433 million and adjusted EBITDA reached $801 million.
The brokerage cut its 2025 EPS estimate to $7.80 from $8.94 and its 2026 estimate to $6.55 from $9.56, expecting slower growth after the recent decline in crypto prices.