# The Watch List: Coinbase (COIN) _Is COIN falling behind HOOD?_ September 11, 2026 • Michael Nadeau --- # The Watch List: Coinbase (COIN) ## Is COIN falling behind HOOD? Michael Nadeau September 11, 2026 Hello readers, Coinbase still generates more revenue than Robinhood. Yet the market now values COIN at less than half of HOOD’s market cap. That gap reflects a growing concern. While Coinbase has spent years diversifying beyond trading, Robinhood is increasingly moving onto Coinbase’s home turf. With a track record of world-class UX serving retail users, Robinhood is now poised to bring stocks, crypto, stablecoins, and onchain applications into a single consumer experience, backed by one of finance's strongest retail distribution engines. It’s all happening just as BTC hints at entering the “early bull” phase of the next expansion. In this week’s edition of [*The Watch List*](https://thedefireport.io/price-targets?utm_source=thedefireport.beehiiv.com&utm_medium=referral&utm_campaign=the-watch-list-coinbase-coin), we analyze Coinbase’s ongoing revenue diversification, Q2 performance, and how an investor might think about HOOD vs COIN. Topics covered: - [Quarterly Revenues](#total-quarterly-revenues) - [Operating Expense](#operating-expenses-by-year) - [Balance Sheet](#balance-sheet) - [Competition](#competition) - [Valuation Comp to HOOD](#valuation-comp-to-hood) - [Risks](#risks) - [Closing Thoughts](#closing-thoughts) Let’s go. # Total Quarterly Revenues Data: The DeFi Report, Coinbase SEC Filings - In Q2, Coinbase generated $1.22b top-line revenue, down 13.7% q/q, and 18.5% y/y. - Of this revenue, 49.1% came from transactions, with retail trading accounting for 75.4% of the total transaction revenue. - For reference, retail trading represented 95% of total transaction revenue in 2021. - Notably, Coinbase has yet to exceed its revenue high-water mark, set in Q4 of 2021. Furthermore, the firm is still losing money during “risk-off” market periods, as we saw in Q2 ($360m loss, $150m net of crypto asset losses). ##### Transaction Revenue by Year Data: The DeFi Report, Coinbase SEC Filings - During the first two quarters of ‘26, transaction revenues were $1.35b. This is on pace to be 33.1% lower than ‘25. ##### Transaction Revenue by Quarter Data: The DeFi Report, Coinbase SEC Filings ##### Transaction Revenue Key Takeaways - Retail dominance is slowly fading. Retail trading made up 95% of transaction revenue in 2021 and 83% of total top-line revenue. In Q2, it was down to 75% of transaction revenue and 37% of total top-line revenue. - Institutional trading is growing in share. In 2025, it accounted for 12% of total transaction revenues, up from 5% in 2021. In Q2, institutional trading represented 16.7% of total transaction revenue and 8.2% of top-line revenue. - Other Transaction Revenue now makes up 6.2% of total transaction revenue. This is primarily Base L2 sequencer fees and payments revenue, a new line item that didn’t exist prior to 2023. - The transaction revenue mix is becoming more diversified. When retail activity collapsed in 2022, Coinbase’s total revenue fell 59%, and retail transaction revenue fell 66%. Today, transaction revenue is spread across consumer, institutional, and other transaction revenue, reducing Coinbase’s dependence on retail trading alone. - However, transaction revenues have not recovered to 2021 levels. In fact, 2025 transaction revenues were down 40% compared to 2021 (due to a 48% drop in retail trading revenues). Relative to Q2 of ‘21, retail transaction revenues in Q2 of ‘26 were still *75.3% *lower. ##### Subscription & Services Revenue by Year Data: The DeFi Report, Coinbase SEC Filings - During the first two quarters of ’26, subscription and services revenue totaled $1.14b (43% of top-line revenue). At the current run rate, full-year revenue would be approximately $2.28B, or 19.5% below 2025. - Stablecoin revenue (tied to USDC) is the largest component, driving 47% of subscription & services revenue. ##### Subscription & Services Revenue by Quarter Data: The DeFi Report, Coinbase SEC Filings ##### Subscription & Services Revenue Key Takeaways - The segment has grown 5.5x over the past 4 years, a 53% CAGR. Most notably, it grew every year, even during the 2022 bear market. However, through the first two quarters of ‘26, subscription and service revenue are on pace to be 19.5% lower than in 2025. - Stablecoins are now the single largest revenue line in this segment, representing 24% of top-line revenue. These revenues come from Coinbase’s partnership with Circle (USDC), under which Coinbase receives 100% of all USDC revenues on the Coinbase platform (exchange, prime, custody services). Coinbase also receives 50% of the “residual” reserve income on all USDC held off-platform (other exchanges, DeFi, wallets, etc.). In case you’re wondering, yes, Coinbase gets roughly half of Circle’s reserve revenue via this partnership. Through the first two quarters of ‘26, stablecoin revenues are on pace to be 2.5% higher than ‘25. - Staking revenues peaked at $706M in ’24 and declined 4% in ’25. Through H1 ’26, blockchain rewards are running roughly 46% below last year’s pace, reflecting lower crypto prices/reward rates despite growth in native units staked. - Other Subscription & Services revenue, primarily driven by Coinbase One, grew 31% in 2025 to $555M, representing 7.2% of total revenue (8.8% in Q2). Coinbase One now has roughly one million subscribers. - During Q2, total Subscriptions and Service revenue accounted for 45.5% of Coinbase’s top-line revenue. These revenues are generally more recurring and less trading-sensitive, providing an important offset to volatile transaction revenue. When you add it all up, Coinbase's revenues were down 13.7% in Q2, and 18.5% y/y. # Operating Expenses by Year Data: The DeFi Report, Coinbase SEC Filings - Through the first two quarters of 2026, Coinbase’s OPEX was $2.77b, on pace to be 2.9% lower than in 2025. - That said, operating expenses *still* exceed revenue during risk-off market cycles, as seen in Q2, when the firm reported a $360m net loss ($150m net of crypto asset losses). ##### Operating Expenses by Quarter Data: The DeFi Report, Coinbase SEC Filings ##### Operating Expense Key Takeaways - Coinbase’s cost structure became unsustainable in 2022, with operating expenses at $5.9b against just $3.2b in revenue. The company was burning cash at an alarming rate, with Tech & Dev alone at $2.3b and G&A at $1.6b. - This changed when it cut OPEX by 45% in 2023 after restructuring the workforce (laying off 950 employees), overhauling the hiring process, and refocusing on core products. - Operating Expenses are now back to ‘22 levels, but the business is 2x larger today and has turned an operating deficit into operating leverage. Coinbase’s operating margin in 2025 was 20%. However, it fell to -9.3% in Q2. - Sales & Marketing accounted for 18% of OPEX in Q2, with roughly half tied to USDC rewards as Coinbase incentivizes on-platform USDC balances. Broader marketing program spending declined 34% y/y as Coinbase cut digital advertising spend in response to softer market conditions. - Transaction expense accounted for another 14.2% of Q2 OPEX and scales largely with trading activity and other platform usage. - 62.2% of OPEX in Q2 came from Tech & Development (up 22.1% in Q2 due to higher engineering headcount) and G&A (up 0.9% y/y). - The remaining costs (5.6%) comprised $52m in restructuring costs and $32m in losses on crypto assets held for operations. # Balance Sheet Data: The DeFi Report, Coinbase SEC Filings Visualizing the balance sheet: Data: The DeFi Report, Coinbase SEC Filings Note: 2022–2024 assets and liabilities include customer crypto safeguarding balances. An accounting presentation change beginning in 2025 removed these large, offsetting balances. ##### Key Takeaways: - Liabilities & Debt: Coinbase ended Q2 with $13.4b of total liabilities, up 17.5% y/y but down 13% q/q. Current liabilities fell 21% q/q to $7.2b, driven partly by the repayment of $1.27b of convertible debt that matured in June. Importantly, most current liabilities are tied to customer and institutional activity rather than ordinary corporate obligations, including $4.3b of customer custodial fund liabilities and $1.7b of obligations to return collateral. Long-term liabilities were roughly flat q/q but nearly doubled y/y, primarily because Coinbase issued $3b of new convertible debt in 2025 around the time of the Deribit acquisition. Despite the higher debt load, the structure remains unusually cheap: $1.5b due in 2029 and $1.5b due in 2032 carry 0% coupons, while $1.27b due in 2030 carries just 0.25%. Coinbase incurred only $85m of interest expense in 2025 versus $298m of corporate interest and other income. - Assets: Outside of cash, Coinbase has $4.14b of goodwill, including roughly $2.82b related to the Deribit acquisition, $1.47b in crypto assets, $840m in strategic investments (including its Circle stake), and $175m in marketable investments. Roughly $867m represents other operating assets such as receivables, lending-related assets, and equipment. - The biggest balance sheet change came from the Deribit acquisition last year. Total goodwill rose from $1.14B to $4.17B, with Deribit contributing $2.82B of goodwill and $1.39B of identifiable intangible assets. - Overall, Coinbase’s balance sheet is quite strong. The company holds $8.6b of cash (all-time high) against roughly $6.5b of (cheap) long-term debt, before accounting for another $2.3b in crypto assets and strategic investments. This gives Coinbase substantial flexibility to weather a downturn, pursue acquisitions, and invest in new products. Furthermore, its debt structure is remarkably cheap. # Competition Data: The DeFi Report, Coinbase SEC Filings # COIN vs HOOD When we think about Coinbase’s competition, we focus on Robinhood. Both companies are founder-led. Both launched around the same time (2012 for Coinbase, 2013 for Robinhood). Both serve millennials and Gen Z, and both firms are building on crypto rails. Of course, COIN/HOOD has been down only since Q1-24. Data: The DeFi Report Robinhood has all the momentum. And it’s easy to extrapolate that. But what do the numbers say? # Valuation Comp to HOOD Data: The DeFi Report, SEC Filings, Yahoo Finance ##### Key Takeaways: - Robinhood trades at a $108b market cap today vs $47b for Coinbase, despite Coinbase generating 27% more revenue over the last year. - Why? Margins. Robinhood’s 43.9% operating margin and 43.8% profit margin reveal the key difference (Coinbase was negative in Q2). - Growth is the other key factor. Robinhood has a 5-year top-line revenue CAGR of 18.3% vs -11.3% for Coinbase. Currently, Robinhood has all the momentum via 1) Robinhood Chain, 2) Prediction Markets, and 3) Trump Accounts. # Risks - Competition. It's intensifying on multiple fronts. Traditional brokerages are expanding their crypto offerings (Schwab, Fidelity). Binance dwarfs Coinbase internationally. BlackRock, Fidelity, Galaxy, and others are building competing infrastructure for institutional clients. Finally, new crypto-native trading apps such as Fomo and Axiom are eating into retail flows. - Margins. Despite high retail trading fees, Coinbase has struggled to generate *new revenue streams that scale efficiently *at low marginal cost. - Regulation. Coinbase is currently playing a key role in the Clarity Act negotiations. If new rules tilt the playing field toward incumbents and away from crypto-native services, this could materially impact Coinbase’s business. - Cyclicality. Despite all the progress in diversification, 49% of revenue is still transaction-based and directly tied to crypto prices and market sentiment. - Interest rates. Stablecoins now account for 24% of top-line revenue. This makes a large share of Coinbase revenue subject to interest rates. - Security and data breaches. The May 2025 incident cost the firm $345m and caused some serious reputational damage. # Closing Thoughts HOOD has momentum through prediction markets and Robinhood Chain. Their apps and UX are superior to Coinbase. And they have the licenses + ties to the Gov’t via Trump Accounts. This is what Coinbase faces in the near term. In the long term, we think Coinbase needs to become more efficient and improve its UX (the two areas where Robinhood dominates) if it’s ultimately going to grow its monthly users, which have been largely flat since ‘21. We exited the majority of our COIN position in Q3/Q4 of last year (270% gain). But still hold shares at an average entry of $99.58. If you’d like access to our portfolio, weekly “cycle awareness reports,” and alerts when we make changes, you can sign up for TDR Pro and get one month free [here](https://thedefireport.io/friends?utm_source=thedefireport.beehiiv.com&utm_medium=referral&utm_campaign=the-watch-list-coinbase-coin). If you’re an existing Pro member and would like to lock in at a 33% discount ($16.67/month), you can do so [here](https://thedefireport.io/pro20?utm_source=thedefireport.beehiiv.com&utm_medium=referral&utm_campaign=the-watch-list-coinbase-coin). Take a Report. And Stay Curious. ***Disclaimer****: Individuals have unique circumstances, goals, and risk tolerances, so you should consult a certified investment professional and/or do your own diligence before making investment decisions. The author is not an investment advisor and may hold positions in the assets covered. Certified professionals can provide individualized investment advice tailored to your unique situation. This research report is for general educational purposes only, is not individualized, and as such should not be construed as investment advice. The content contained in the report is derived from both publicly available information as well as proprietary data sources. All information presented and sources are believed to be reliable as of the date first published. Any opinions expressed in the report are based on the information cited herein as of the date of the publication. Although The DeFi Report and the author believe the information presented is substantially accurate in all material respects and does not omit to state material facts necessary to make the statements herein not misleading, all information and materials in the report are provided on an “as is” and “as available” basis, without warranty or condition of any kind either expressed or implied.*