Coinbase rises following court decision in Ripple case

Shares of Coinbase (COIN) are on the rise on Thursday after a federal court ruled that Ripple Labs pay the U.S. Securities and Exchange Commission $125M in penalties over charges of improperly selling the cryptocurrency XRP, a fraction of what the SEC was seeking in a civil suit.

SURPRISE DECISION: According to a court filing, Ripple Labs has been ordered to pay the SEC a penalty of about $125M, a decision that bodes well for Coinbase. The agency was seeking almost $2B, saying Ripple raised money without registering its token as a security back in 2020. Of note, Coinbase is facing fines of up to $4B after the SEC accused the U.S. crypto exchange of operating as an unregistered securities exchange and offering its staking-as-a-service program, which allowed holders of certain cryptocurrencies to earn rewards for holding those tokens.

NOTABLE: Last week, Coinbase reported Q2 adjusted EBITDA of $596M versus $189M last year, and Q2 revenue of $1.4B, in line with consensus. “Q2 was a quarter of strong progress for Coinbase and the crypto industry,” the company said. “In addition to solid financial results and continuing to build trusted products to help drive crypto adoption, Coinbase and the crypto industry made great strides towards achieving regulatory clarity in the US, which we believe will be a major unlock for innovation in the industry.” For Q3, Coinbase sees subscription and services revenue between $530M-$600M, and transaction expenses in the mid-teens as a percentage of net revenue.

Following the news, H.C. Wainwright lowered the firm’s price target on Coinbase to $295 from $315 but kept a Buy rating on the shares. The firm said the company reported solid results despite industry-wide declines in global crypto trading volumes in the quarter following elevated levels of activity in Q1. The recent shift in tone in data center for crypto has strengthened its bullish outlook for the stock and the industry, Wainwright added.

Keeping a Buy rating as well, Compass Point lowered the firm’s price target on Coinbase to $295 from $325. The firm said it is pushing out the ramp up of higher retail trading volumes into Q4 and the first half of 2025, in line with rate cuts, and also adjusting expense estimates higher given the recent guidance. However, Compass Point views the recent selloff as a buying opportunity as it continues to believe Coinbase remains well-positioned to benefit from a rising crypto price cycle and thinks regulatory clarity and a Trump administration “would be positive for the stock.”

BofA also lowered the firm’s price target on Coinbase to $246 from $263, maintaining a Neutral rating on the shares. The company reported a “strong quarter,” but management also raised near-term expense guidance, noted the firm, which also lowered its Q3, 2025 and 2026 EPS estimates to $1.08, $6.46 and $9.85, respectively, driven by a higher expense forecast.

Meanwhile, Barclays raised the firm’s price target on Coinbase to $206 from $196 but kept an Underweight rating on the shares post the Q2 report. The company’s revenue beat, but opex was a bit higher than expected and adjusted EBITDA missed by 3%, the firm told investors in a research note. Barclays said the tone of the call was positive, with management noting in particular an improving political backdrop.

PRICE ACTION: In afternoon trading, shares of Coinbase have gained almost 8% to $192.55.