COIN's performance significantly exceeded expectations. How should one identify an entry point?

As the largest compliant cryptocurrency exchange in the United States, $Coinbase(COIN.US)$ Coinbase delivered a strong set of results for the third quarter, with both revenue and profits surpassing market expectations, driving its share price up by approximately 5%.

For investors, increased stock price volatility during earnings season presents numerous trading opportunities. How can one identify the optimal timing for post-earnings trades on Coinbase? This week’s [Earnings Summary] provides insights!

Overall, Coinbase's Q3 performance exceeded expectations across the board.

Total revenue for Q3 reached $1.869 billion, representing a 55% year-over-year increase and significantly surpassing Wall Street’s forecast of $1.8 billion. Net profit amounted to $433 million, reflecting a robust 477% year-over-year growth. Adjusted EPS was $1.50, also above expectations.

Both core businesses—trading revenue and subscription and services revenue—experienced sequential growth, demonstrating strong growth momentum. This also sends a positive signal that Coinbase is rapidly evolving from being solely a 'cryptocurrency exchange' to a diversified 'everything exchange'.

Specifically, Coinbase’s revenue structure is undergoing positive changes, shifting from an over-reliance on trading revenue toward a more balanced dual-driver model.

Trading revenue for this quarter reached $1.046 billion, marking a 37% sequential increase and far exceeding last year’s $573 million in the same period.

The primary driver behind the growth in trading revenue was a substantial increase in trading volume, which grew by 25% sequentially to reach $295 billion. Retail trading volume amounted to $236 billion, up 37% sequentially, while institutional trading volume reached $59 billion, growing 22% sequentially.

Additionally, Coinbase’s acquisition of Deribit, the world’s leading cryptocurrency options exchange, has made a significant contribution. In the 47 days following the acquisition of Deribit, this transaction generated $52 million in revenue for Coinbase, accounting for nearly 39% of institutional trading income. This indicates that Coinbase has successfully entered the high-growth derivatives market through the acquisition. As institutional demand for crypto options continues to rise, Deribit is expected to become one of Coinbase’s core growth engines in the future.

Another major growth area is subscription and service revenue, which is more diversified and stable compared to transaction revenue and less affected by market volatility.

Subscription and service revenue in Q3 reached $747 million, a 14% increase quarter-over-quarter, setting a new quarterly record. This revenue includes segments such as stablecoins, blockchain, interest income, and financial fees.

Of this, stablecoin revenue accounted for 47%, reaching $355 million. This income primarily stems from USDC, the dollar-pegged stablecoin, with the company benefiting through its partnership with Circle, the issuer of USDC. Q3 stablecoin revenue grew by 7% quarter-over-quarter, slower than other segments, mainly due to the Federal Reserve's rate cuts, which led to a decline in yields.

Additionally, driven by rising average crypto asset prices (mainly Ether and Solana), blockchain rewards increased in Q3, boosting blockchain revenue by 19% quarter-over-quarter to $185 million. Growth in other subscription and service revenues was largely attributed to Coinbase One’s expansion, reflecting an increase in paid users, which is closely tied to the platform’s ecosystem. The company’s strategic transformation into an 'exchange for everything'—including prediction markets and tokenized stocks—has enhanced the platform's attractiveness, indirectly increasing the subscription value of Coinbase One.

In terms of profitability, adjusted EBITDA for Q3 was $801 million, a 56% increase quarter-over-quarter, corresponding to an EBITDA margin of 43%.

The improvement in profitability was driven by both revenue growth and cost reductions. Total expenses in Q3 declined by 9% quarter-over-quarter, with the main spending directed towards the company’s strategic investments, including acquisitions and integration of Deribit and Echo. This further demonstrates COIN’s operational efficiency improvements. The combination of 'revenue growth and cost reduction' represents a positive development that investors welcome.

In summary, COIN, as the largest compliant cryptocurrency exchange in the United States, boasts strong brand credibility—an advantage difficult for competitors to replicate. With its diversified development—from relying solely on trading revenue to a dual revenue model of 'trading + subscription services,' including Base blockchain, stablecoin services, and a series of acquisitions—COIN’s crypto-economic ecosystem has become increasingly robust. In the future, it will not only capture the benefits of an upswing in the crypto market but also mitigate potential market fluctuations through diversified strategies.

From a technical perspective, following the Q3 earnings release, COIN’s stock price surged approximately 5%. We can use Fibonacci extension levels to assess key levels for future stock prices. Currently, the stock price finds strong support at $292, with short-term resistance at the 23.6% level ($365). The next target is the 38.2% level ($410).

Combining RSI indicators, the current RSI value is around 50, not yet entering the overbought zone, suggesting there may still be room for upward movement.

Of course, COIN’s stock price remains highly correlated with the performance of cryptocurrency assets. Investors should closely monitor market volatility and manage profit-taking and stop-loss strategies accordingly.

(PS: The above technical analysis is for educational reference only. All technical indicators have limitations and should not be directly regarded as investment advice.)

For fellow investors with higher risk appetites, options trading tools can also be used to amplify returns with relatively smaller capital outlays.

If fellow investors are optimistic about the long-term trend of COIN, they can adopt the following strategies while waiting for its price to rise, in order to reduce holding costs, generate additional income, or build positions at a lower cost.

One scenario is that when we hold shares of COIN, we can consider adopting a Covered Call strategy. If we anticipate that the stock price will experience a moderate increase over a certain period, we can sell out-of-the-money call options to collect premiums, thereby reducing the cost of holding the stock.

Another scenario is that when we do not hold shares of COIN, if we expect the stock price to rise moderately, we can also adopt a Bull Call Spread strategy by choosing to "buy Call A" + "sell Call B," where the strike price of Call A < the strike price of Call B. "Buying Call A" aims to achieve bullish expectations and profit from an increase in the underlying stock's price, while "selling Call B" serves to reduce the cost of "buying Call A."

For more detailed options strategies, fellow investors can click on the course to continue learning>>[Options Strategies], and fellow investors are also welcome to leave comments in the comment section to interact and share their insights.