Coinbase Global, Inc. (COIN)

By both methods, the value today (DCF $130 · Multiples $68) is below the market price ($179).

Today — expensive, no margin of safety: at $179 trades ~162.8% above its value discounted to today (~$68); the expected return does not even reach the risk-free rate (4.5%).

At 5 years — Sobrevalorado: the expected total return is negative — the price already discounts a demanding scenario that, if not met, results in a loss.

The bridge: the return at 5 years falls below the risk-free rate (4.5%) — which is why there is not even a discount to today's value. To require a 15% annual return, it would need to be bought at ~$42.

Educational / informational. Does not constitute investment advice.

The inverse approach: instead of projecting growth to obtain the value, the market price ($179) is taken as given and it solves for what annual owner-earnings growth would need to hold for 5 years for the present value —at the method's rate (4.5%, no-growth terminal)— to equal that price. It is the disconfirmation test: the expectations the price already pays for, contrasted against the method's projection.

The price discounts growth (19.3%/year) above our base case (11.0%/year) → it is priced for a demanding scenario and leaves little cushion against a slowdown.

That growth implies ~$2.1 bn of owner earnings in year 5 (vs ~$1.5 bn of our base case). It recalculates if the DCF assumptions are edited.

Year-by-year projection of the selected scenario. From each year, two versions of the flow are derived: growth FCF (operating flow − total capex, the cash surplus) and maintenance FCF (the owner earnings: what the business yields if it only sustains its capacity). The flow is returned almost in full (dividend + buyback) or redeployed into the operation, so that EV stays roughly flat and multiples compress because the metric grows, not because of cash accumulation. The valuation is done on EV/EBIT normalizado a mitad de ciclo. In edit mode, revenue, margins, capex, and exit multiples can be adjusted.

Coinbase is valued as a single consolidated business — a marketplace that charges fees for trading, custody, and interest on balances — and not with the banking template its activity code suggests: it has no regulated loan portfolio, no deposits, and no regulatory capital, so the valuation runs at the enterprise level on EV/EBIT and not on book value. The archetype is that of crypto exchanges, with an exit-multiple band of 12 to 17 times operating income: below a traditional exchange, whose network effect rests on open interest that does not migrate, and above an investment bank, because here a real, growing non-transactional franchise exists (custody for exchange-traded funds, subscriptions, and the stablecoin economy) with near-zero capital intensity. Mid-cycle normalization is the assumption that decides everything. This company's operating income flips sign within the cycle, not just magnitude: 2021 +$3.079 billion, 2022 −$2.710 billion, 2023 −$0.162 billion, 2024 +$2.307 billion, and 2025 +$1.435 billion, on revenue of $7.836 billion, $3.194 billion, $3.108 billion, $6.564 billion, and $7.181 billion. Valuing off a bull-market fiscal year would be the concatenated optimism the method prohibits. Year-0 keeps the actual revenue level of the twelve-month period ended June 30, 2026 ($6.283 billion) and normalizes the operating margin to the revenue-weighted average of the full 2021-2025 cycle, which is 14.2% — the midpoint, not the top. The other two readings are disclosed so the range stays visible: the median of that same period's annual margins is 20.0% and the weighted average of the last three fiscal years is 21.2%, but the latter excludes the contraction year and would be the top of the range. The current period's margin is 9.9% ($0.619 billion on $6.283 billion). The business's structural improvement — half of revenue is already non-transactional, stock-based compensation fell from $1,566 million to $839 million between 2022 and 2025, and a 14% headcount reduction was announced in May 2026 — is credited to the margin's expansion toward year 5 (17.0% in the base case), not to a higher starting point. Net income for the current period is negative (−$0.988 billion) while operating income is positive (+$0.619 billion). The difference is the fair-value revaluation of the crypto assets the company itself holds on its balance sheet — $528.9 million of loss on those held as investments and $20.7 million on operating ones in 2025, against gains of $687.1 million and $71.7 million in 2024 —, plus the $680.5 million gain from the sale in Circle's public offering. None of that is recurring operating income: it is identified, disclosed, and not extrapolated. Client assets in custody ($5,347 million as of December 31, 2025) are offset by a liability of the same size and do not enter the bridge as excess cash. CAPEX. The XBRL concept for purchases of property, plant, and equipment has been abandoned since September 30, 2023 — a 1,004-day lag against the current window — so that value is not used. The fiscal 2025 cash flow statement does not present its own capex line: equipment purchases and capitalized software travel within "other investing activities, net" ($110.6 million in 2025), an unnamed residual that should not be called capex. Maintenance capex is taken as the software and equipment amortization the issuer does publish — $121.3 million for fiscal 2025 —, the right magnitude for a business whose fixed assets are capitalized software; net fixed assets are just $264.6 million on $29,672 million of total assets. The figure is for FISCAL 2025, not for the current TTM window, and is disclosed as such. Depreciation and amortization for the current period ($253.6 million) grows against the prior fiscal year from the amortization of intangibles recognized in the Deribit acquisition, which carries no associated capex. STOCK-BASED COMPENSATION. It is material: 14.9% of revenue and 58.9% of free cash flow ($1,714 million of operating cash flow minus $121.3 million of maintenance capex; against reported operating cash flow without netting, the ratio gives 54.8%, which understates materiality). The chosen metric expenses it on its own — operating income deducts it — so no further adjustment is required; the operating cash flow margin shown is net of it, because reported cash flow adds it back and that is not the owner's flow. Guidance. The second quarter 2026 release (the Item 2.02 8-K of July 30, accession number 0001679788-26-000087) is incorporated. The company does publish numeric guidance, but for expenses and for the subscription and services line, not for total revenue or earnings: for the third quarter it projects between 500 and 580 million dollars of subscription and services revenue — against 555 million delivered in the second — transaction expenses in the mid-teens as a percentage of net revenue, between 980 and 1,080 million of adjusted expenses and around 245 million of share-based compensation; for the full year it reduced and narrowed adjusted expenses to between 4,200 and 4,450 million from the initial 4,250 to 4,600 million, after cutting headcount by 14% in May. Transaction revenue is not guided and the release itself warns against extrapolating the partial figure for the quarter under way, because it follows market volume: in the second quarter total market spot trading volume fell 25% against the prior quarter and volatility reached multi-year lows. That is why the revenue path is not anchored to guidance — none exists to anchor it to — while the margin path does find support in the expense reduction already guided and executed, which is the half of the equation the company does control. Path. The revenue trajectory is noisy by construction (−2.7% in 2023, +111.2% in 2024, +9.4% in 2025, and −10.4% in the current period against the same period a year earlier), so year 1 is not anchored to any single stretch: it starts at 12.0% — a moderate recovery from a depressed window, supported by the non-transactional half of revenue, which grew 22.6% in 2025 with the stablecoin at +48% — and decays smoothly, one point per year, to 8.0% by year 5. The adverse scenario stresses year 1 at 2.0% and leaves revenue flat over five years with the margin compressed to 10.0% from competition and fee compression; the favorable scenario extends the runway with a full bull cycle. The base case's exit multiple is 12.5 times, in the lower half of the band: the 8% terminal growth rate contributes little, the moat is narrow, and return on invested capital falls below the 10% bar. SHARE PATH. It is modeled flat across the three scenarios, but not at the current quarter's count (263.412 million): that count is ANTIDILUTIVE — with a net loss, convertibles, options, and restricted units fall out of diluted weighted-average shares, as in the first quarter of 2026 — and using it as the terminal count over a profitable year 5 would overstate per-share value by around 8%. It is anchored to the diluted weighted average of the last PROFITABLE fiscal year, FY2025: 287.2 million, with a dilutive wedge of 27.1 million shares (10.4%) against that same year's basic average. The point-in-time shares outstanding — the comparable magnitude, without the antidilutive artifact — went from 267.8 million as of December 31, 2025 to 263.8 million as of June 30, 2026 (−1.5%). The trailing-twelve-month buyback ($2,034 million) exceeds the period's free cash flow (about $1,593 million) and was partly funded by the proceeds of the 2025 convertible notes issuance ($2,957 million net): a debt-funded buyback is not extrapolated as a sustainable net reduction, so the conservative assumption is that it merely offsets dilution and the path stays flat at 287.2 million. The path is the same across the three scenarios because the rate comes from a single revealed history and the scenarios vary the speed of the business, never the capital-return policy. There is no dividend.

Today's elevated multiple is the price of growth: if the business grows, the entry point cheapens on its own going forward (the metric grows while EV stays roughly flat). The exit multiple at 3 years is higher than the terminal at 5 years —at 3 years there is more growth still ahead—, so the value curve shows whether value creation is concentrated in the early or the later years. The required return is applied to the base scenario.

They are valued separately, with their own rationale, and are not incorporated into the base or the verdict (they are excess return). When assigning them value — in Editmode —, the total with optionalities updates live, without moving the base.

The verdict, the base CAGR, and the margin of safety are always calculated on the base; optionalities do not alter them (with optionalities at $0 they do not move).

Each card fixes a required annual return and answers: if the business is worth $85 in 5 years, what is the maximum that can be paid today to obtain that return? Since it now trades at $179, the margin of safety is how much cheaper the market is than that maximum. The three thresholds: 4% covers inflation (the floor), 10% is the long-term average return, and 15% is the level of a great investment.

With a target price of $85 in 5 years and a required return of 4.5% annually, the maximum to pay today is $68. Against the current market price ($179), the margin of safety is -162.8% (trades above the maximum → a premium is paid) and the total return at that price would be -13.9% annually.

• Entry multiple. 50× over normalized operating income, well above the archetype's exit-multiple band.
• Estimated return. -14% annually over five years in the base case, with -14% in the adverse scenario and -14% in the favorable scenario.
• Valuation base. Mid-cycle normalized margin of 14.2%, the weighted average of the 2021-2025 cycle, not the best fiscal year.
• Second lens. The present-value approach on normalized owner earnings also comes in below the price.

Each margin over sales, year by year: historical (solid line) → projection (dotted).

• ✕ROIC exceeds the cost of capital (~10%)
• ✓CFROIC backs up the ROIC (118%, cash vs. accruals)
• ✓Healthy balance sheet (low corporate debt)
• ✓Durable competitive moat (multiple advantages)

• Return on capital. 7.2% normalized, below the 10% bar; 15.5% if acquired goodwill and intangibles are excluded.
• Cash generation. Operating cash flow of $1,714 million over twelve months, inflated by stock-based compensation added back.
• Capital intensity. Maintenance capex on the order of $121.3 million on $7,181 million of revenue: the business is genuinely capital-light.
• Reinvestment runway. Equities, futures, event contracts, and the Base chain expand the terrain without requiring physical capital.

Annual levels from the official filing (10-K); the % over each bar is the year-over-year (YoY) growth vs the prior year.

Revenue breaks down into trading volume times the implicit fee for the transactional part, and into stablecoin circulation, staked assets, and custodied assets times their respective rate for the subscription-and-services part. The indicator to follow is the retail-channel fee, with numerator and denominator of the same scope: consumer transaction revenue over consumer trading volume, which fell from 1.53% in 2024 ($3,430.3 million over $224 billion) to 1.39% in 2025 ($3,322.8 million over $239 billion), a 9.2% decline. Consolidated trading volume excludes derivatives, equities, and event contracts, so the ratio over total transactional revenue is not comparable between 2024 and 2025 once Deribit consolidates.

The % are the annual (year-over-year) growth: each year —historical and projected— vs the prior one; the TTM (trailing 12m) vs the TTM of a year ago, to avoid overlapping windows. The historicals are exact figures from the official filings; the projected years come from the year-by-year model (the intermediate years without their own series are interpolated between the anchors). The projected columns (+1y…+5y) are 12-month windows counted from the TTM close (30-jun-2026): the projection starts from the most recently reported data, not the fiscal year. The projected base is realistic and unbiased — the risk discount is applied at the end, via the required return. The rationale for each metric is in the (i).

• Recent growth. The trailing-twelve-month window contracts 10.4% against the year-earlier window, after +9.4% in 2025 and +111.2% in 2024.
• Growth driver. Subscription and services grew 22.6% in 2025 while fees barely rose 1.7%.
• Company guidance. The company publishes numeric guidance by quarter, though not for total revenue: for the third quarter of 2026 it projects between 500 and 580 million dollars of subscription and services revenue, transaction expenses in the mid-teens as a percentage of net revenue, between 980 and 1,080 million of adjusted expenses and around 245 million of share-based compensation. For the full year it reduced and narrowed the adjusted expense range to between 4,200 and 4,450 million, from the initial 4,250 to 4,600 million, with a 14% headcount reduction in May that left 4,321 employees at the close of the quarter against 4,988 at the close of the prior one. In the second quarter it met the five metrics it had guided. What it does not guide is transaction revenue or earnings, and it says so: it expressly warns against extrapolating the partial figure for the quarter under way.
• User base. Monthly transacting users went from 8.4 million to 9.2 million, but platform assets fell from $404 billion to $376 billion.

• Revenue recurrence. 39% of revenue is already subscription, custody, and interest, independent of trading volume.
• Predictability of the result. Operating income flipped sign twice in five years: it is not a predictable flow.
• Pricing power. The retail-channel fee falls from the migration toward the advanced experience and Coinbase One, and from zero-fee competitors.
• Operating leverage. Mostly fixed costs: the margin went from −84.9% in 2022 to 35.2% in 2024 with the same business.
• Behavior in a downturn. In 2022 revenue fell 59% and operating income sank to −$2,710 million.

Not all debt is equal: only the structural needs refinancing; the rest is operational (self-liquidating).

Structural debt is what is exposed to the contraction phase of the cycle; operational debt (leases, matched funding) self-liquidates with the business.

• ✓Leverage (net debt / EBITDA)Net cash $2.8 bn
• ✓Interest coverage (EBIT / interest)10.4x
• –Liquidity (current ratio)no data
• ✓Cash quality (CFROIC vs ROIC)CFROIC backs 118% of ROIC
• ✕Value creation (ROIC − 10% bar)-3pp
• ✓Malinvestment test (capex vs incremental ROIC)Capex/D&A 0.5x — no over-investment
• –Float / working capitalNeutral WC
• !Dilution (SBC % of revenue + shares)SBC 14.9% of revenue

A traffic-light interpreted by the method (not generic): float (negative WC) adds up, capex is judged by incremental ROIC (malinvestment test), and a lender is not subjected to corporate solvency. The (i) shows the derivation of each number.

• Net cash. $2,845 million of net cash as of June 30, 2026, not counting the proprietary crypto assets.
• Cost of debt. $85.4 million of interest expense in 2025, coming mostly from about $1,738 million of plain senior notes at 3.375% and 3.625%, not from the low-coupon convertibles.
• Client funds. $5,347 million of custodial funds offset by a liability of the same size; they are not excess cash.
• Potential dilution. The 2029, 2030, and 2032 convertible notes can be settled in shares if their conditions are met.

How cash comes in and how it is deployed. In green, the business's own cash (the owner-FCF it generates and reinvests); in gray, the float and credit — customer and funding money, which is not the shareholder's.

Over the trailing twelve months, the buyback ($2,034 million) exceeded the period's free cash flow (about $1,593 million) and was partly funded by the proceeds of the convertible notes issuance. Physical capital reinvestment is minimal, on the order of $121.3 million annually (the software and equipment amortization the issuer publishes), because the business is capital-light: net fixed assets are $264.6 million on $29,672 million of total assets.

Who owns the shares — the alignment and whether there is a controlling shareholder.

• Alignment. Dual-class structure with concentrated control; ownership detail is pending from the proxy.
• Buyback. $2,034 million over twelve months, above free cash flow and supported by convertible note issuance.
• Acquisitions. Deribit took goodwill from $1,140 million to $4,169 million; the return on that capital has not yet shown up.
• Cost control. Stock-based compensation fell from $1,566 million in 2022 to $839 million in 2025, with a headcount cut in May 2026.

• The market pays for the bull-cycle optionality, not for the normalized result: over the weighted margin of the 2021-2025 cycle the price implies a multiple well above the archetype's band, while over the best fiscal year (2024) it falls within it. Whoever buys at this price is valuing the peak, not the average.
• The decline from the fifty-two-week high coincides with a measurable deterioration in the business, not with an absence of buyers: revenue over the trailing twelve-month window contracts 10.4% against the year-earlier window, net income turns negative, and on May 5, 2026 the company disclosed, in an 8-K (Item 2.05), costs associated with a reduction in operations. It is the repricing of expectations for a business whose result tracks the underlying asset's price, not a discount from missing buyers.
• The non-transactional franchise — stablecoin, crypto staking, custody, and subscriptions, 39% of revenue and growing 22.6% — is real and is what keeps the valuation above that of a purely cyclical exchange. The market assigns it a value the normalized result does not yet back up.

No positive source of discrepancy between perception and reality in the buyer's favor is identified, and that is the signal that the analytical edge is missing: the price bakes in a bull cycle that the normalized base case cannot promise.

The annual return (CAGR at 5 years) in each scenario, with the total period return below — the margin of safety made visual: upside range wide, downside range narrow.

Even in the bear scenario, the return holds at -27%/year (-80% total): the margin of safety protects the downside. The bull (+2%/year, +8% total) exceeds it comfortably — a favorable asymmetry, with a narrow downside range and a wide upside range.

• Asset cycle. Bitcoin and Ethereum were approximately 45% of trading volume in 2025: concentration is high.
• Regulation. Active litigation over the classification of crypto staking, lending, and the event contracts launched in December 2025.
• Interest rates. Stablecoin revenue and interest on custodied funds fall directly with short-term rates.
• Cybersecurity. May 2025 data breach incident: $311.2 million paid in cash for the incident during 2025, within a $345.2 million platform-incidents line; litigation ongoing.
• Banking dependence. Banking partners treat it as a higher-risk client; the filing cites the March 2023 precedent.

Each thinker's analytical framework applied to our data.

• Buffett / GrahamQuality + margin of safety

  Fails the quality gate: ROIC 7% does not clear the 10% bar.

• Peter LynchGrowth at a reasonable price (GARP)

  A fast grower growing 11% at a multiple/growth of 4.5 → expensive for its growth.

• Joel GreenblattCheap and high-return (Magic Formula)

  Earnings yield 2% (EBIT/EV) + ROIC 7% → falls outside the Magic Formula.

• Howard MarksPerception vs reality + cycle

  The price discounts 19% vs our 11%: priced for perfection, no favorable mispricing.

• Seth KlarmanCapital protection (bear scenario)

  Bear-scenario floor -27%/yr over 5y (material loss) → risk of permanent capital loss.

• Pat DorseyMoat strength (Five Rules)

  A narrow moat, stable; sources: intangibles, switching costs, efficient scale, network effects → partially passes the Five Rules.

• Aswath DamodaranExpectations implied by the price

  The price demands 19% growth, far above our 11% — heroic assumptions.