Analysis: Stablecoins, Payments, and Prediction Markets Have Become New Growth Points for Crypto Companies, but Profitability Remains Challenged

On November 6, the latest financial reports from Coinbase, Robinhood, and Circle show that new business growth has not yet freed them from the pressures of the crypto market cycle. Coinbase's trading revenue in the third quarter fell 23% year-on-year to $590 million, with retail spot trading volume decreasing 9% quarter-on-quarter; Robinhood also disclosed a weakening in crypto trading revenue. StoneX analyst Mark Palmer believes that about 60% of Coinbase's net revenue now comes from recurring business or activities not directly tied to spot trading, and the financial report helps dispel the view that the company is merely leveraging crypto trading volume. However, Clear Street analyst Owen Lau pointed out that the earnings beat expectations mainly due to cost reductions rather than a strengthening in trading. Barclays believes that reliance on spot crypto trading remains a key challenge and has lowered Coinbase's target price from $149 to $120 due to a weak outlook for the fourth quarter.

For Circle, third-quarter reserve revenue fell 8% year-on-year to $658 million, with the USDC supply at approximately $73.9 billion at the end of September, remaining roughly flat year-on-year. Although the company's total revenue grew 17% year-on-year to $865 million, $182 million of that came from the token presale on the Arc blockchain; excluding this, revenue would decline by about 8% year-on-year. The growth of the stablecoin business also faces margin pressure. The average USDC balance on the Coinbase platform reached a record $22 billion, but the reward spending to attract and retain these balances is also increasing. After deducting rewards, its stablecoin revenue grew only 3% quarter-on-quarter and fell about 16% year-on-year. Lau believes that stablecoins remain the company's most sustainable business, but the profit margin per additional dollar of USDC balance is declining.

The scale of new business usage is still expanding. Circle disclosed that USDC transaction volume grew 49% year-on-year to $13.9 trillion, with the annualized transaction volume of the payment network reaching $41.3 billion. Coinbase's prediction market saw daily active users grow over 60% quarter-on-quarter, with annualized revenue exceeding $200 million, and the prediction market and derivatives together contributed about a quarter of trading revenue. Based on the growth of stablecoins and prediction markets, Oppenheimer analyst Rayna Kumar raised Coinbase's target price to $207. However, Compass Point analyst Ed Engel cautioned that while the prediction market is growing, it has lower margins. Clear Street also noted that the payment business has yet to provide substantial revenue contributions to Coinbase.

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