The Real Bull Case: Why Coinbase Could Explode When Crypto Recovers
Summary
- Coinbase (COIN) reported a net income loss in Q4 due to unrealized crypto asset depreciation, but adjusted EBITDA remained positive (~$500M), indicating strong core business fundamentals.
- The company has successfully diversified revenue; 12 product lines now generate over $100M ARR each, reducing reliance on volatile transaction fees.
- Subscription and Services revenue has grown 6x over the last 5 years, signaling a shift toward a more durable, recurring revenue model.
- Robinhood (HOOD) is outperforming in the current environment because it captures equity trading volume (S&P/Nasdaq all-time highs) while crypto remains muted.
- The analyst recommends a dual-long strategy: owning both COIN (institutional infrastructure/crypto pure-play) and HOOD (retail/equity diversification).
Trade Ideas
Coinbase reported a net loss due to unrealized crypto holdings dropping in value, yet adjusted EBITDA was positive (~$500M). Additionally, "Subscription and services... grew like six times over the last five years." The market is punishing the stock for "paper losses" on its balance sheet while ignoring the rapid growth of its sticky, non-transactional revenue (Subscription & Services). As the company pivots to "agentic e-commerce" and institutional infrastructure, it becomes less correlated to spot crypto prices. LONG. The "hidden gem" thesis relies on the market eventually valuing the durable subscription revenue over the volatile trading fees. Continued crypto bear market suppresses retail engagement; potential margin compression on stablecoin revenue (USDC) if Fed rates drop significantly.
Coinbase's "Base" blockchain is a "layer 2 built on top of Ethereum... whatever happens on Ethereum like Coinbase can profit from that." Coinbase's long-term infrastructure bet (Base) is inextricably linked to Ethereum. As Coinbase pushes "agentic e-commerce" standards, the underlying settlement layer (ETH) benefits from increased utility and transaction volume. LONG. It is the underlying commodity powering the infrastructure Coinbase is building. L2 fragmentation or alternative L1s gaining market share over Ethereum.
Robinhood's earnings are growing despite the crypto slump because "people are still trading stocks and stocks are like S&P, NASDAQ, they are still hitting all-time highs." They also reported 4x growth in prediction markets. Unlike Coinbase, Robinhood is diversified into traditional equities. It acts as a hedge: if crypto lags, HOOD still profits from record-high stock market volumes and new verticals like prediction markets. LONG. It is the preferred vehicle for retail engagement in traditional finance while retaining optionality on a crypto recovery. A correction in the broader stock market (S&P 500) would crush HOOD's primary revenue driver; less institutional moat compared to Coinbase.
Up Next
This Milk Road Macro video, published February 18, 2026, features Martin Toman discussing COIN, ETH, HOOD. 3 trade ideas extracted by AI with direction and confidence scoring.
Speakers: Martin Toman · Tickers: COIN, ETH, HOOD