Evaluating Coinbase After a 13.5% Weekly Jump and Ongoing Global Partnerships News

• Thinking about jumping into Coinbase Global stock? If you have ever wondered whether all the hype matches the current price, you are definitely not alone.
• After a wild surge of 13.5% over the past week but a 21.7% slide in the last month, Coinbase is showing that volatility is part of the deal. Yet, it is still up 472.3% over three years.
• Recent headlines around expanding global partnerships and regulatory discussions have kept Coinbase in the crypto spotlight. These developments help explain why the stock swings have been grabbing so much attention lately.
• The company currently earns a 2 out of 6 valuation score, suggesting some metrics see it as undervalued while others flash caution. Next, we will break down these methods, and at the end, we will introduce a fresh take on valuation you will not want to miss.

Coinbase Global scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Coinbase Global Excess Returns Analysis

The Excess Returns model assesses how much profit a company produces above and beyond the minimum expected by investors, based on the capital it invests. For Coinbase Global, this valuation depends on how efficiently management is able to generate earnings with shareholders' money, as well as how this performance might evolve in the future.

Key figures from the model include a Book Value of $59.62 per share, reflecting what the company's assets are worth today. Analysts estimate a Stable EPS of $8.90 per share, based on expected future returns on equity from seven independent sources. The cost of equity, which is the return required by shareholders, is $4.96 per share. Coinbase's Excess Return per share, or value created above that required return, is $3.94. The company's average Return on Equity is a robust 15.00%, suggesting healthy profitability. The Stable Book Value, based on analyst consensus, is projected at $59.36 per share.

With this context, the Excess Returns model assigns Coinbase an intrinsic value of $136.65 per share. At present, the stock trades at a level that indicates it is 99.6% overvalued relative to this estimate, highlighting a sharp disconnect between price and underlying fundamentals.

Result: OVERVALUED

Our Excess Returns analysis suggests Coinbase Global may be overvalued by 99.6%. Discover 920 undervalued stocks or create your own screener to find better value opportunities.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Coinbase Global.

Approach 2: Coinbase Global Price vs Earnings

The price-to-earnings (PE) ratio is a widely used metric for valuing profitable companies like Coinbase Global. This ratio is especially useful because it compares the current stock price to earnings, helping investors gauge how much they are paying for each dollar of profit. A higher PE can be justified for companies with strong growth prospects or lower risk, while a lower PE might reflect uncertainty or more modest expectations.

Currently, Coinbase trades at a PE of 22.9x. This sits just below the Capital Markets industry average of 23.6x, and well below its peer group average of 33.4x. However, raw comparisons can be misleading since they do not account for company-specific factors.

This is where the concept of the “Fair Ratio” comes into play. Developed by Simply Wall St, the Fair Ratio takes a deeper look at Coinbase’s situation by factoring in expected earnings growth, industry trends, profit margins, company size, and risk profile. In Coinbase’s case, the Fair Ratio is 19.8x, which is slightly lower than both its actual PE and the market benchmarks. Using the Fair Ratio provides a more nuanced perspective than simply comparing to industry averages or peers, since it tailors expectations to the company’s unique fundamentals.

With Coinbase’s current PE only about 3x above the Fair Ratio, the stock looks modestly expensive but not dramatically so. On this measure, shares are priced close to fair value for its risk and growth profile.

Result: ABOUT RIGHT

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1443 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Coinbase Global Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let's introduce you to Narratives. Narratives are a simple, intuitive approach to investing that let you express your own perspective about a company. Essentially, they are the story you believe about Coinbase Global tied directly to your numbers about future revenue, earnings, and profit margins. All of these roll into a customized fair value estimate.

With Narratives, you do not just rely on industry averages or analyst consensus. You create a clear bridge between what you think will happen, a financial forecast, and a fair value for the stock. Narratives are available for free to anyone on Simply Wall St’s Community page, used by millions of investors, and are designed to make sophisticated valuation decisions easy and accessible without the need for advanced spreadsheets.

By comparing your fair value (based on your Narrative) to the current price, you can confidently decide if it is the right time to buy, sell, or hold. Your Narrative will automatically update as new information such as major news, earnings, or guidance becomes available. This keeps your strategy current without extra work.

For example, some investors currently estimate a bullish fair value for Coinbase above $500, based on aggressive growth in tokenization and new blockchain services. Others are more conservative, using weaker trading volumes for a fair value near $185. Narratives make it easy to see why investors disagree and help you align your decisions with what you actually believe about the company’s future.

Do you think there's more to the story for Coinbase Global? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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