Can Coinbase’s Rally Continue After White House Opens 401k Access to Crypto?
Trying to make a call on Coinbase Global is not for the faint of heart, but it is fascinating. If you have been tracking COIN over the past year, you have witnessed a stock that seems determined to prove skeptics wrong, surging an impressive 110.5% in the past twelve months and a staggering 374.4% over three years. Returns like these naturally get investors wondering whether the rally can continue, or if it is time to lock in gains and move on.
Recent developments give even seasoned crypto watchers something to chew on. Policy shifts from Washington, like the White House move to expand crypto access in retirement accounts, have both fueled debate and fanned volatility. Meanwhile, price targets from big Wall Street banks continue to shift alongside fresh reports of potential acquisitions, such as Coinbase’s rumored talks with India’s CoinDCX. Whether these headlines add perceived risk or unlock new growth, they have certainly kept momentum alive. This is clear from the stock’s 7.6% gain in just the past week and nearly 14% move in the past month.
But what about valuation? Right now, Coinbase earns a valuation score of 1 out of 6. It is considered undervalued by just one typical measure, while most standard benchmarks suggest it might be fully priced or even a bit rich. Of course, no single number tells the whole story. Next, we will break down what each valuation approach says about COIN and tease out where conventional methods fall short, because sometimes the real story is in what the numbers miss.
Coinbase Global scores just 1/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.
The Excess Returns model estimates a company’s value by examining how effectively it generates profits above its cost of equity capital. Essentially, it asks whether Coinbase turns each dollar invested into significantly more than it costs to fund that equity. The analysis focuses on return on invested capital and long-term growth projections.
For Coinbase Global, the average return on equity is 15.65%. The current Book Value stands at $47.17 per share, with analysts projecting a stable Book Value of $56.02 per share in the future. Stable earnings per share are $8.77, based on a consensus from seven analyst forecasts. The cost of equity is $4.60 per share, while the company generates an excess return of $4.17 per share. This indicates Coinbase is producing considerable value for shareholders beyond the baseline cost of funding its equity, which is a key sign of quality in capital markets.
After running these metrics through the Excess Returns methodology, this model assigns an intrinsic value to Coinbase stock of $137.39 per share. Compared to its current market price, this results in the stock being roughly 152% overvalued by this measure.
Result: OVERVALUED
Our Excess Returns analysis suggests Coinbase Global may be overvalued by 152.0%. Find undervalued stocks or create your own screener to find better value opportunities.
The Price-to-Earnings (PE) ratio is often the go-to metric when valuing profitable companies, as it reflects what investors are willing to pay for each dollar of current earnings. For businesses generating consistent profits like Coinbase, the PE ratio offers a clear snapshot of both investor sentiment and expectations for growth.
However, what makes a “normal” PE can differ widely depending on growth expectations and perceived risks. Higher growth prospects typically warrant a higher PE, while greater risks can pull it down. For Coinbase Global, the current PE ratio stands at 31.1x. This is just below the average for its peer companies at 32.5x, but notably higher than the broader Capital Markets industry average at 26.3x.
This is where the proprietary Simply Wall St “Fair Ratio” comes into play, offering a more tailored take. Unlike simple peer or industry comparisons, the Fair Ratio incorporates factors such as future earnings growth, profit margins, market capitalization, and specific business risks to estimate a suitable multiple for a company’s unique profile. For Coinbase, the Fair Ratio is calculated at 19.6x. That is considerably below its actual PE, signaling that the growth and risk profile may not justify a premium over this benchmark. Based on this, Coinbase stock appears to be trading materially above its justified valuation using this method.
Result: OVERVALUED
PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.
Earlier, we noted that traditional valuations often miss the whole story, so let’s introduce Narratives: an intuitive way to blend your view on Coinbase Global’s future with the numbers. A Narrative is simply your perspective on the company, an explanation of the business’s prospects, risks, and catalysts, which you connect explicitly to your estimates for future growth, margins, and ultimately what you believe Coinbase is truly worth.
Unlike static models or industry averages, Narratives link a company’s story to measurable forecasts and fair value, letting you invest based on your reasoning, not just the consensus. Narratives are easy to use. Right from the Community page on Simply Wall St, millions of investors are already building them, sharing for others to review, and updating them dynamically when new events or earnings reports come in. This helps you decide if Coinbase is a buy or sell for your thesis by instantly comparing your Fair Value to the latest market price and revising your outlook as news unfolds.
For example, some investors with an optimistic outlook see Coinbase’s fair value at $510.00, expecting widespread blockchain adoption, while more cautious investors set it at $185.00, citing cybersecurity risks and volatile trading volumes. This shows how powerful and personal Narratives make investment decisions.
Do you think there’s more to the story for Coinbase Global? Create your own Narrative to let the Community know!
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.
Companies discussed in this article include COIN.
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