Coinbase Global Inc (NASDAQ:COIN) experienced a drop in its share price on Tuesday, closely following a decline in Bitcoin (CRYPTO: BTC) values. This downturn aligns with Argus Research’s recent decision to downgrade the company’s stock rating from Buy to Hold, primarily due to concerns surrounding its valuation.
The pressure on Coinbase’s shares is a reflection of how closely cryptocurrency exchange stocks are tied to the prices of digital assets. Argus Research analyst Kevin Heal expressed concerns over Coinbase’s valuation despite its strong operational performance. Currently, Coinbase shares are trading at a significant multiple of 39 times the firm’s updated earnings forecast for 2026, a stark contrast to its competitors, which typically trade at multiples ranging between 24 to 27 times.
In his report, Heal emphasized the significant growth record of Coinbase as the leading cryptocurrency trading platform, but suggested that the prevailing market volatility may cause some investors to reevaluate their positions in crypto asset trading. Notably, Coinbase’s third-quarter results were robust, showing earnings of $1.50 per share, a notable increase from $0.28 during the same quarter in 2024 and exceeding the consensus estimate of $1.10. Revenue rose by 55% year-over-year to reach $1.9 billion, fueled by $1.05 billion in transaction revenue—up by 6%—and $656 million from subscriptions and services—up by 14%.
Additionally, Argus highlighted the performance of USDC, the world’s second-largest dollar-backed stablecoin, which has reached new highs with a market capitalization exceeding $74 billion. Looking forward, the firm projects Coinbase will generate revenue of $7.3 billion in 2025 and $8.4 billion in 2026. However, it also revised its earnings forecasts downward, adjusting the 2025 estimate from $8.94 per share to $7.80 and the 2026 estimate from $9.56 per share to $6.55, citing recent weakness in cryptocurrency prices.
Heal indicated that Coinbase might be considered for a return to the Buy list when its earnings multiples align more closely with other exchanges. As of the latest reports, Coinbase shares are down 2.50%, trading at $249.56.
