Compass Point Lowers Coinbase Price Target, Highlights New Revenue Streams from Tokenized Stocks and Prediction Markets
Compass Point has reiterated a Sell rating on Coinbase (COIN) and lowered the price target from $266 to $230. Analysts expect Coinbase to unveil multiple new products at an upcoming event, with a focus on tokenized stocks and prediction markets as part of a strategy to diversify revenue beyond crypto-trade fees.
Tokenized equities could generate about $230 million in annual revenue for Coinbase, while prediction markets might contribute around $210 million. These new verticals are anticipated to be offered to US customers from the start, in contrast to Robinhood's rollout of stock tokens in Europe. The stock-trading economics are expected to follow a model similar to eBrokers, with no commissions but rebates from market makers.
Regarding prediction markets, if Coinbase adopts an approach like Robinhood or WeBull, approximately $200 million in revenue could be earned from contracts priced at $0.01 each, alongside around $10 million in on-platform USDC stablecoin revenue. Coinbase would derive a significant portion—99%—of stablecoin revenue from assets backing Circle’s $78 billion USDC product when held on Coinbase. Screenshots suggest that Coinbase’s prediction market product may be powered by Kalshi, which holds custody through Coinbase Custody for USDC. The Coalition for Prediction Markets, including Coinbase, Robinhood, and Kalshi, aims to set rules for the sector.
Despite these prospects, revenue realization from these new verticals could take years and may not offset earnings sensitive to volatile crypto prices. Following the report, Coinbase shares fell more than 5% to around $252. Year-to-date, the stock is up about 1.7%, lagging behind Robinhood, which rose roughly 215% to $118.
