Is Coinbase Global (COIN) Undervalued After Its UK Derivatives Launch?

What Coinbase Global’s UK derivatives launch means for investors

Coinbase Global (COIN) has started offering leveraged derivatives trading to professional investors in the UK, including perpetuals, futures, and options across crypto, commodities, equities, and foreign exchange markets.

This launch follows Coinbase Global’s recent moves into US stock trading and crypto perpetuals in Australia and positions the company as a regulated provider of a wider set of products for international clients.

See our latest analysis for Coinbase Global.

Against this backdrop of UK derivatives expansion, Coinbase Global’s share price has been under pressure, with a 90 day share price return of down 26.37% and a year to date share price return of down 37.18%. The 3 year total shareholder return remains positive at 87.65%.

If you are following Coinbase Global’s move into more complex trading products, it can also be useful to see what else is shaping crypto related markets and check out 19 cryptocurrency and blockchain stocks

With Coinbase Global expanding into UK derivatives while reporting recent losses and a weaker share price, the key issue is whether investors are still early in the story or already paying for the bulk of what is on the table.

Most Popular Narrative: 39.9% Undervalued

According to one widely followed narrative, Coinbase Global’s fair value of $247.39 sits well above the last close of $148.58. This frames the UK derivatives launch in a very different light for long term investors.

I think Coinbase is best understood as a leveraged bet on long-term crypto adoption, rather than a normal operating business with smooth, predictable growth.

What matters most is not whether next year looks clean, but whether crypto becomes a meaningfully larger asset class over time. If that happens, Coinbase should benefit through higher trading activity, higher asset values on the platform, and growth in its custody and subscription businesses.

Read the complete narrative.

Want to see what sits behind that $247.39 fair value for Coinbase Global? The key ingredients are growth in revenue, margins and a future earnings multiple that assumes a much larger business than today. Curious which of those drivers carries the most weight in the narrative and how sensitive the valuation is to small changes in the cycle assumptions.

Result: Fair Value of $247.39 (UNDERVALUED)

Have a read of the narrative in full and understand what’s behind the forecasts.

However, this Coinbase Global narrative could be challenged if crypto activity weakens again or if tighter regulation limits growth in higher margin products such as derivatives.

Find out about the key risks to this Coinbase Global narrative.

Another view on Coinbase Global’s value

The user narrative argues Coinbase Global looks undervalued at a fair value of $247.39, yet our DCF model tells a very different story. On that view, the current share price of $148.58 sits well above an estimated future cash flow value of $14.29, which points to an overvalued stock. Which set of assumptions do you trust more?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Coinbase Global for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 49 high quality undervalued stocks. If you save a screener we even alert you when new companies match – so you never miss a potential opportunity.

Next Steps

With Coinbase Global pulling in both bullish and cautious views, it helps to look past the headlines and focus on the underlying data yourself. Take a closer look at what sits behind those positive expectations by checking the 1 key reward.

Looking for more investment ideas beyond Coinbase Global?

If you want to stress test your view on Coinbase Global and broaden your opportunity set, use the Simply Wall Street Screener to compare it with other stocks.

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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