Coinbase's $718.7 million profit includes $715 million of crypto gains; $120 and $240 targets are one bet
Coinbase holds 18,000 bitcoin of its own and booked $165 million of transaction revenue in October's first 25 days. The fight over the stock is a fight over one price, not over the exchange.
Richard Tang · 3 min read
Coinbase's+7.54% — Coinbase, up 7.54 percent today own bitcoin hoard has passed 18,000 coins, chief executive Brian Armstrong confirmed on the October 29 earnings call 1. The number landed in the middle of a Wall Street fight: Morgan Stanley−0.20% — Morgan Stanley, down 0.20 percent today cut the stock to Underweight with a $120 target on November 2, the same day BTIG kept a $240 Buy 23. Both camps are betting on the same price. Third-quarter profit was mostly the mark, the accounting gain from revaluing that pile each quarter 4, and the exchange underneath it is running no slower than last quarter.
October's ledger contradicts the volume-collapse story
Morgan Stanley's downgrade counts fourth-quarter transaction revenue of about $165 million through October 25, tracking to $607 million, 11% under the street 2. Third-quarter transaction revenue was $450 million from consumers and $92 million from institutions 1.
Together, about $542 million, or about $5.9 million a day across the 92-day quarter 1; October's first 25 days ran about $6.6 million a day 2. What fell in October is the price of what customers trade, not their willingness to trade it. Bernstein's full-year loss estimate of $2.60 a share gives up on bullish prices, not on volume 5.
The treasury turns reported profit into a coin mark
The headline rested on one line: net income of $718.7 million included $715.0 million of net gains on crypto assets held for investment 4. Strip those gains out and adjusted net income was $78 million 4. The September 30 balance sheet carries 17,954 coins at about $1.50 billion, against a cost basis of $1.26 billion 1. Bitcoin near $77,600 on November 2 has taken roughly $105 million off that since quarter-end 5. Armstrong's prearranged selling window, which we sized last week, opens November 16 5.
Bitcoin's slide has already taken about $105 million off the quarter-end mark
- Value of 17,954 coins
- Estimate
Data
| Value of 17,954 coins | |
|---|---|
| Cost basis | $1.26B |
| Sept 30 mark | $1.5B |
| Nov 2 mark (estimate) | $1.4B |
Reported profit swings with the bitcoin mark while the operating line slides with the cycle
- Net income (GAAP)
- Adjusted EBITDA
Data
| Net income (GAAP) | Adjusted EBITDA | |
|---|---|---|
| Q3 '23 | -$2.3 | $178.3 |
| Q4 '23 | $273.4 | $324 |
| Q1 '24 | $1,176.2 | $1,014.3 |
| Q2 '24 | $36.2 | $595.6 |
| Q3 '24 | $75.5 | $448.6 |
| Q4 '24 | $1,291.2 | $1,289 |
| Q1 '25 | $65.6 | $929.9 |
| Q2 '25 | $1,428.9 | $512.1 |
| Q3 '25 | $432.6 | $800.7 |
| Q4 '25 | -$666.7 | $565.9 |
| Q1 '26 | -$394.1 | $303.3 |
| Q2 '26 | -$359.5 | $207.8 |
| Q3 '26 | $718.7 | $332.9 |
The bulls expect the hack to hand over Binance's customers
The Binance breach touched about $6.3 billion, and nearly $20 billion has left the exchange since, though withdrawals resumed on November 1 and Binance has committed to covering all losses 6. Goldman Sachs−0.69% — Goldman Sachs, down 0.69 percent today calls the event a net negative for crypto stocks but names Coinbase, with BitGo+4.09% — BitGo, up 4.09 percent today and Robinhood+1.41% — Robinhood, up 1.41 percent today, best-positioned for migrating assets 6.
BTIG's $240 Buy rests on the same migration 3, and Cathie Wood's ARK Invest bought about $9 million of the stock into the drop 7. Coinbase's quarter points that way too: a 10.7% share of trading volume, a fourth straight quarterly gain, and customer assets back at a peak share of the market 4. Those gains predate the hack, so the migration is still a hypothesis.
What settles the argument, and when
Trading fees and the treasury mark ride crypto prices. The yield on the $22 billion of USDC, the stablecoin, held in Coinbase products rides interest rates, and lower rates took $52.8 million off stablecoin revenue last quarter even as balances grew 84. The Federal Reserve moves both sides of the business. The half Coinbase controls looks intact: subscriptions and services now bring in nearly half of net revenue 4.
The argument resolves on three numbers. Bitcoin against the roughly $83,500 mark the quarter put on those coins, where every $1,000 move is worth about $18 million across 17,954 of them 1. Armstrong's window, which opens November 16 and produces sales only if the stock reaches prices the plan does not disclose 5. And whether October's daily pace holds through quarter-end 2. Until those print, the $120 target and the $240 one are the same bet at different prices 2.
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