Benchmark Sees Long Runway for Coinbase Despite Q2 Revenue Dip

Coinbase’s second-quarter 2025 revenue fell 26% quarter-over-quarter to $1.5 billion, sending shares into a 15% dump, yet Benchmark analysts reiterated a Buy rating and a $421 price target, arguing the dip is temporary.

The Numbers Behind the Coinbase Slide

Coinbase generated $1.5 billion in total revenue for Q2 2025, matching management guidance but lagging the $1.59 billion consensus. Transaction revenue plunged to $764 million, down 39% from Q1, as retail trading cooled. Subscription and services revenue, powered by USDC balances and staking, landed at $656 million, off 6% quarter-over-quarter.

Operating expenses rose 15% to $1.5 billion after a $307 million charge tied to May’s data-theft incident, lifting GAAP net income to $1.4 billion thanks to $1.5 billion gain on strategic investments (mostly unrealized). Ex-items, adjusted net income was just $33 million, underscoring slimmer core profits. EPS came in at $0.12, far below the $1.51 that analysts expected.

The weak print hit the stock hard: 15% of COIN was dumped on July 1, mirroring July’s broad risk-off mood after new U.S. tariffs and a soft payrolls report bruised tech names. Still, Coinbase ended the quarter with $9.3 billion in cash and USDC and $1.8 billion in crypto investments, giving it ample runway.

Macro conditions didn’t help. Bitcoin hovered near $120k in mid-July, yet spot volumes stayed thin, denting exchange fees. Rival Robinhood posted stronger trading revenue, highlighting Coinbase’s heavier reliance on crypto turnover. Finally, management guided July transaction revenue to roughly $360 million and forecast Q3 subscription revenue of $665–$745 million, hinting at stabilizing trends if volumes rebound.

Analyst Reactions and Share Slide Outlook

Benchmark’s Mark Palmer called the sell-off “noise,” keeping a Buy and a $421 target. He says Coinbase is evolving from an exchange into core crypto infrastructure, citing its Circle partnership and Base chain development. Compass Point disagreed, cutting the stock to Sell and trimming its target to $248 on fears of waning retail activity.

According to market data, Wall Street remains split: 15 Buys, 18 Holds, 4 Sells among 38 analysts, with targets ranging from $200 to $550, reflecting high uncertainty. Keefe, Bruyette & Woods also nudged its target down, citing the 8.9% revenue miss versus its own model.

Bulls highlight Coinbase’s steady growth in staking and USDC interest income, which now covers nearly half of operating costs even when trading slumps. Bears counter that subscription gains may fade if USDC yields compress and competition in custody heats up.

Regulatory clarity offers a wild card. July’s U.S. GENIUS Act and CLARITY Act set a framework for stablecoins, a segment where Coinbase already dominates via USDC. Bears counter that subscription gains may fade if USDC yields compress and competition in custody heats up. If rules unlock new institutional flows, transaction volumes could bounce faster than models predict.

Management’s Q3 outlook pegs tech and G&A costs at $800–$850 million, implying flat opex despite global expansion. Success hinges on keeping that promise while scaling derivatives, tokenized assets, and the “everything exchange” vision.

So, Where Is Coinbase Headed Next?

Coinbase’s Q2 2025 looked soft on the surface – revenue down, EPS light, stock punished. Yet the balance sheet is strong, subscription income holds steady, and Benchmark sees a long runway.

Investors face a clear trade-off: near-term volume risk versus long-term infrastructure upside. Regulatory wins and product rollouts could tilt the balance. 

For Web3 builders and traders, one lesson stands out: macro swings hit exchanges first, but diversified fee streams and on-chain bets may cushion the blow if management executes.