DD Coinbase

AI Summary

Author's phase-2 due diligence sees Coinbase as slightly undervalued with strong margins and a comeback when crypto season returns but plans to watch for months due to near-term weakness.

COIN — WATCH The author argues Coinbase is slightly undervalued because it earns sustainable transaction and subscription fees rather than relying on its own coin, with a 40% net profit margin. He expects the company to make a comeback when the crypto 'season' starts and sees future prediction markets as additional growth. He is not buying yet because he does not expect a near-term recovery and Q4 2025 won't be amazing, so he will keep observing for months.

Also I don't believe they will recover anytime soon and Q4 2025 wont be amazing, so I will keep observing it for a while (months).

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Hey everybody,

Coinbase is getting my attention lately, it made it to phase 2 of my selecting path.

**Quick summary of dd style:**  
Phase 1: I have a list with 5 to 10 stocks and do my dd over a month or two. Usually 80% get crossed off.  
Phase 2: 1 to 3 stocks make it and it's getting really interesting.  
Phase 3: I buy it, usually only one stock makes it.

**DD Coinbase:**

**Quantitative:**  
P/E: around 20 (solid)  
Net profit margin: +40% (are you kidding me)  
Cashflow: got smaller in 2025 but is still positive  
Sources of income: transaction revenue, subscription and services revenue, other stuff like interest income, miscellaneous fees etc.

There is of course more to that but these are the most important factors to me. Overall what I like is that the company isn't based on their own coin. They make their money from transaction fees which is a much more sustainable revenue and less volatile.

**Qualitative:**  
Currently we are in a "crypto winter" and this market lives from hype and false prophets. From my experience I can say crypto is a magnet for people who usually have no financial background and aren't so responsible with their money. Everything comes fast and everything goes fast in this market. Because of that I believe Coinbase is currently slightly undervalued and when the "season" starts they will make a "comeback".

Also the "future" looks bright for them, they want to implement "Prediction Markets" which is a fancy word for sports betting/gambling. So people can lose money faster, they already have an army of gambling addicts which they now can milk holistically. Amazing

I like that Coinbase is overall playing it "safe" in this very very strange market and focuses on solid revenue instead of burning bright for one season. Its a very easy business model in this very unreagulated market, I like this.   


**Will I buy it now ?**   
I don't know, it only made it to "phase 2" of my DD. Also I don't believe they will recover anytime soon and Q4 2025 wont be amazing,  so I will keep observing it for a while (months). Time is not against me!

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