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Investment Memorandum · Preview

For informational purposes only. Not investment advice.

Coinbase Global, Inc.

COIN

NEUTRAL

May 27, 2026

Research Conclusion

HOLD — Moderate-Low Conviction. Coinbase is mid-transformation from crypto exchange to diversified digital financial platform (exchange + Deribit derivatives + USDC + Base L2 + OCC trust + equities). At ~$200 vs. PWFV $205-220, modest upside; bull case (+60-100%) requires multiple converging catalysts (OCC charter + USDC supply + crypto bull); bear case (-45-55%) requires only a normal crypto cycle. Better entry $150-170 transforms R/R substantially. Position size 1-3% as high-volatility allocation.

Company Overview & Moat Assessment

Coinbase Global, Inc. (NASDAQ: COIN) is the largest U.S. crypto exchange and a diversified digital financial platform offering spot crypto trading, derivatives (post-Deribit $2.9B acquisition), USDC stablecoin infrastructure (51% interest), Base Layer-2 blockchain, custody for institutions, and prediction markets. The OCC trust charter application (pending H2 2026) would enable federally-chartered crypto custody for pension/insurance/SWF clients. FY2025: revenue $7.18B (+9.4% YoY) with $1.26B GAAP NI; transaction revenue 63% of total, subscription 37%. Q1 2026 reported $1.41B revenue with a $394M GAAP loss (cycle volatility). Brian Armstrong is CEO/co-founder; stock has compressed from $300+ peaks to current $200 range.

▲ Bull Case

  • ◆OCC trust charter approved + institutional custody mandates unlock: Federally-chartered custody enables pension/SWF clients; $50-100B TAM; subscription revenue +$1.5-2B annual run-rate by FY2028 → $300+ from re-rating.
  • ◆USDC supply reaches $100B+ (post-GENIUS Act): Subscription revenue stable through crypto cycles; valuation comparable to Visa/Mastercard payment rails → +50% multiple expansion potential.
  • ◆Deribit + crypto bull cycle: Derivatives revenue $500M+/yr; transaction revenue +30% on BTC at $135K; FY2027 revenue $12B → $385 (+90%).

▼ Bear Case

  • ◆Crypto winter (BTC -50% to $50K): Transaction revenue cut 40-50%; subscription compresses 20-25%; FY2027 revenue $5.5B → stock price -45-55%.
  • ◆OCC charter denied + opex discipline fails: Platform thesis broken; opex growth stays at 35%; multiple compresses to 4x EV/Revenue → -25-35%.
  • ◆GENIUS Act USDC underperforms; Tether dominance persists: USDC stalls at $60B; subscription revenue $2.8B → -10-15%.
Primary Debate on Wall Street

“Bulls argue COIN is becoming a diversified financial platform with $5B+ subscription floor + Deribit derivatives moat + OCC custody unlock — multiple expansion from 6x to 8-10x EV/Revenue justified. Bears counter that COIN is still 60-70% transaction-revenue-driven; crypto cycle exposure dominates; bear-case math is severe; and management hasn't demonstrated operating leverage at scale. Decision-margin: how much weight to assign the platform diversification narrative vs. the cycle exposure narrative. Most analysts (18 Buy / 12 Hold / 2 Sell) have COIN as a Buy at $200, consensus target $227 — reflecting a balanced but modestly constructive debate.”

Top Catalysts
  • ◆OCC trust charter final ruling (H2 2026) — EXTREME binary impact if approved
  • ◆Q2 2026 earnings + opex discipline (Aug 2026) — HIGH if opex growth <15%
  • ◆BTC price direction — HIGH if >$110K sustained
  • ◆Deribit first full-year contribution (Q4 2026) — MEDIUM-HIGH if >$450M
  • ◆USDC supply growth — HIGH if >$80B
  • ◆Base L2 TVL milestone (FY2026) — MEDIUM if >$25B
  • ◆Equities trading launch (H2 2026) — MEDIUM diversification proof point
  • ◆GENIUS Act final regulatory framework (2026) — HIGH mixed impact
Top Risks
  • ◆Crypto winter (BTC -50% to <$50K sustained) — 30% probability, EXTREME severity
  • ◆OCC trust charter denied — 40% probability, HIGH severity
  • ◆Tether dominance prevents USDC growth — 50% probability, MEDIUM severity
  • ◆Opex discipline fails (>25% growth for 2 years) — 35% probability, HIGH severity
  • ◆SEC enforcement action with $500M+ settlement — 30% probability, MEDIUM severity
  • ◆Armstrong large open-market stock sales ($100M+) — 30% probability, MEDIUM severity
  • ◆Competing derivatives venue takes 10%+ share — 20% probability, MEDIUM severity
  • ◆Adverse stablecoin reserve regulation — 25% probability, MEDIUM severity

Full Memo Continues

5 more sections, locked

  • ●
    Valuation Range & DCF
    Base/bull/bear fair-value range, WACC, terminal growth, sensitivity to revenue + margin assumptions.
  • ●
    Risk/Reward Assessment
    Position-sizing framework with explicit upside/downside skew and entry conditions.
  • ●
    Management & Capital Allocation
    Multi-year capital-allocation track record, incentive alignment, and management readout.
  • ●
    Monitoring Framework
    What to watch each quarter — leading indicators and inflection signals tracked by the analyst.
  • ●
    Unresolved Questions
    Open analyst questions and follow-up research items — the depth signal.

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Margin of Insight

For informational purposes only. Not investment advice.