Bernstein says Q2 is the ‘quarter that doesn’t matter’ for Coinbase as stock tumbles 15% post-earnings

Coinbase shares plunged over 15% following its latest earnings release on Thursday. Still, research and brokerage firm Bernstein is urging investors not to overreact, claiming "Q2 is the quarter that doesn't matter" for the crypto exchange and arguing that its performance was largely irrelevant given the broader digital asset market only started recovering in July.

Coinbase reported $1.5 billion in revenue for the quarter, a 26% sequential decline, driven by a sharp 39% drop in transaction revenues. Subscription and services revenue fell 6% and staking rewards dropped 25%, although stablecoin revenue rose 12%.

Coinbase was also impacted by three one-offs: $307 million in data theft costs, a $1.5 billion unrealized loss on its Circle stake, and $362 million in unrealized crypto asset gains, Bernstein analysts led by Gautam Chhugani noted in a Friday client memo. Despite the declines, the analysts highlighted that trading activity rebounded significantly in July, with $360 million in transaction revenue — a 44% jump from the second-quarter monthly average.

"The digital asset market broadening to ETH (~50% up in July) and other assets started only post the Circle IPO (Q3 onwards), and thus declining transaction revenues were expected and frankly don't matter," Chhugani wrote. "Management indicated a trading resurgence for July, which is what should drive this stock for H2, in our view."

The analysts anticipate greater upward market volatility and a broader shift in trading interest toward blockchain assets like ETH, SOL, and a "long tail of financial tokens" for the remainder of the year, fueled by structural changes around stablecoins and asset tokenization.

Bernstein values Coinbase using a 25x multiple on 2027 earnings, highlighting its long-term growth potential as crypto financial infrastructure matures. The firm reiterated its "outperform" rating on Coinbase shares, maintaining a $510 price target — representing about 35% upside from its July 31 closing price of $377.76.

Coinbase's stock is currently down over 15% in early trading on Friday, according to The Block's COIN price page.

COIN/USD price chart. Image: .

Long-term catalysts for Coinbase

Outlining additional catalysts that could fuel Coinbase's next leg of growth, Bernstein pointed to expanding token listings from decentralized exchanges within its primary platform, deeper integration of stablecoins across its centralized exchange, the Base App and Base Layer 2 network to drive that revenue line, expansion of its crypto derivatives trading, and the firm's ambitions to offer tokenized stocks and prediction markets in the U.S. as part of its "everything exchange" vision.

Finally, the analysts highlighted Coinbase's strategic partnerships with banks like JPMorgan and PNC, as well as fintech platforms like Webull, eToro, and Revolut. Coinbase is "positioning itself as the leading AWS of crypto financial infrastructure," they said, underscoring its aim to be the go-to back-end integration provider rather than just a consumer-facing exchange.

On Thursday, Coinbase also disclosed the acquisition of 2,509 BTC in the quarter, re-entering the top 10 public bitcoin treasury companies ahead of Tesla with a total of 11,776 BTC.

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